FOREWORD TO THE FIRST EDITION
It must be remembered that there is nothing more difficult to plan, more doubtful of success nor more dangerous to manage than the creation of a new system. For the initiator has the enmity of all who profit by the preservation of the old institution and merely lukewarm defenders in those who would gain by the new one.—Nicolo Machiavelli, 1532
Seneca (5 BC–65 AD) wrote that “the greatest loss of time is delay and expectation, which depend upon the future. We let go the present, which we have in our power, and look forward to that which depends upon chance, and so relinquish a certainty for an uncertainty.” His insight could represent the start of risk management, or at least the beginnings of a debate which rages on today.
Simply put, risk management is the art/science of attempting to understand and manage that which hasn’t happened yet. The philosophy of risk was put forth a thousand years ago and the principles, tenets, and maxims of risk management haven’t changed much in the last one hundred years. So what is left for people to debate?
At present, the debate centers around two major issues. First is the issue of risk versus uncertainty. In his seminal work, Risk, Uncertainty, and Profit (1921), economist Frank Knight established the important distinction between risk and uncertainty:
Uncertainty must be taken in a sense radically distinct from the familiar notion of Risk, from which it has never been properly separated.… The essential fact is that “risk” means in some cases a quantity susceptible of measurement, while at other times it is something distinctly not of this character; and there are far-reaching and crucial differences in the bearings of the phenomena depending on which of the two is really present and operating.… It will appear that a measurable uncertainty, or “risk” proper, as we shall use the term, is so far different from an unmeasurable one that it is not in effect an uncertainty at all. We … accordingly restrict the term “uncertainty” to cases of the non-quantitative type.
Knight distinguished between risk and uncertainty, a distinction that explains why risk management has developed into its own discipline in modern times. However, the debate continues about how far we should be trying to manage uncertainty, or whether we must restrict our efforts to managing risk.
The second issue exciting debate today is the question of “positive” risk, commonly called opportunity. In the past, project risks have traditionally been seen as uncertainties that would have a negative impact to project objectives. However, current thinking expands the concept of risk to include “upside” risk, or opportunity. This book is an ambitious attempt to address the current paradigm shift in the field of project risk management, clarifying the difference between general uncertainty and risk, and showing how to tackle both threats and opportunities together.
Tools, techniques, powerful computers, and software have made many seemingly impossible tasks easy to do but, until now, there has always been one thing missing from the risk toolkit. Many textbooks exist, espousing particulars view or styles of risk management. As necessary as these books are, there has been an unfulfilled need for a “How to …” risk management manual. We have been waiting for “A Practitioner’s Guide” to risk management … Practical Project Risk Management: The ATOM Methodology, by David Hillson and Peter Simon is that book. This book is a simple, concise guide for practitioners of project risk management at any level.
The Active Threat and Opportunity Management (ATOM) risk process addresses projects of any size, in any industry. ATOM offers a unique process that can be used to address both threats and opportunities. It minimizes the learning process and maximizes the return on investment for companies and organizations striving to improve their risk management process.
The major concepts in the ATOM approach are simple and repeatable on all projects. This book provides “commonsense” risk management in clear, concise writing that everyone can grasp, understand, and implement. It is a consistent process that can be applied across multiple project and industry standards. Using the same process for threat and opportunity management offers economies of scale and shortens the learning curve for practitioners.
This practitioners’ guide follows the familiar structure of both the PMBOK® Guide and PRAM Guide by describing inputs and outputs at each phase of the process. ATOM is specifically designed for the “medium-sized project” but can be used to advantage on any size project. Tailoring the ATOM process is necessary depending upon your specific needs. Templates for small, medium, and large projects are included. ATOM also contains practical examples and solutions to common situations. This practitioners’ guide optimizes the chance for project success, because it is practical … logical … useable!
David Hillson and Peter Simon have been working hard for many years to advance the state of the art and practice of project risk management. This book captures their insights, allowing practitioners of risk management to be better prepared and well-armed to get the job done. David and Peter have provided the risk community with a unique, thoughtful approach to risk management.
The debate surrounding risk management will doubtless go on, and some people may take issue with some or all of what is offered in this insightful new approach. But at least we now have a clear, concise, and complete “How to” practitioner’s guide to project risk management.
Charles W. Bosler Jr., CPCM
2007 Chairman, PMI Risk Management SIG
May 2007