Project Management

142 Project Management

You’ll continue to bump into things that will throw you in an
unplanned direction. And before long, you’ll abandon your origi-
nal project plan (the one you and your team spent so much
time developing) and begin to live by an uncomfortable combi-
nation of your wits and the seat of your pants.
Risk and uncertainty are unavoidable in project life and it’s
dangerous to ignore or deny their impact. Adopting a “can do”
attitude may be a good way to get your team members ener-
gized and committed, but it’s a foolhardy approach when it
comes to managing a complex project.

Some Basic Definitions

Let’s look at some of the key terms associated with risk man-
agement:

Uncertainty Are you surprised that I didn’t start with a defini-
tion of risk? That’s because uncertainty really drives everything
else. Uncertainty is defined as an absence of information,
knowledge, or understanding regarding the outcome of an
action, decision, or event. Project managers constantly suffer
from an absence of information, knowledge, or understanding.

Risk Risk is actually a measure of the amount of uncertainty
that exists. It’s directly tied to information, as Figure 8-1 illus-
trates. This is not exactly the way most of us think about risk in
everyday situations. However, in the world of project manage-
ment, risk relates primarily to the extent of your ability to pre-
dict a particular outcome with certainty. This interpretation is

Amount of Risk

No

Information

Total

Uncertainty

Relative

Uncertainty

Some

Information Complete

Information

Total

Certainty

Figure 8-1. Risk relationship between information and uncertainty