Everything we do in life involves risk. In our professional lives, trying to avoid risk is itself a risk: Work too cautiously, and we risk missing the chance to grow and shine, and our careers may suffer for it.
We cannot avoid risk yet we often avoid thinking about it. That is a shame, because if we think strategically about risk, we can use it to increase our odds of coming through difficult situations with our goals — and careers — intact. Rather than pretending risk doesn’t exist, why not learn to manage it to our own benefit?
In previous columns, I’ve focused often on career issues facing Ph.D.s who have left academe, since that is what I did after earning a doctorate in bioscience. I’ve written about productivity, project planning, entrepreneurship, and job security (or lack thereof). But learning how to handle risk in your work is a skill that Ph.D.s should acquire whether they work inside or outside of academe — especially in management positions.
The first step: Acknowledge the risks your projects face. Start by writing a list of the things that can go wrong. That may sound gloomy, but it’s essential. Your list need not be exhaustive, and probably never can be. But try to identify common risks — like the departure of a key colleague for a new job or the failure of a new technique upon which your project depends. The types of risks you identify will depend on the specifics of your work. A writer living in Minneapolis probably doesn’t need to think much about the risk an earthquake would pose to her work, but a ceramic artist in Los Angeles should.
Of course, most risks are more prosaic than an earthquake. If you’re struggling to identify risks that are relevant to your project, try thinking about the last time you missed a deadline, or had to work through a weekend to meet a submission date. What went wrong to cause that to happen?
Once you have a list of risks, evaluate each one on two scales:
- Likelihood. Force yourself to honestly assess how likely each risk is.
- Impact. Then think about how much damage could occur under each scenario.
You can use formal risk-analysis methods to produce numeric ratings on each of those two scales, but that is probably overkill. For most of us, it is sufficient to simply think carefully about the likelihood and impact of each adverse situation.
Now it’s time to draft a second, more-detailed list. Go back through your initial list and consider how you might make each potential negative outcome less likely to occur, and also how you might minimize the damage to your project if one does happen. In project-management jargon, this step is known as risk mitigation. A mitigation is anything that makes a risk less likely to derail your overall goal. Common mitigation strategies include:
- Frontloading. This is when you do the riskiest part of a project first, to give yourself more time to respond if something goes wrong. This is commonly used to handle technical risks, such as the fear that an important new lab technique will fail to work.
- Adding "slack," or a buffer. This strategy involves adding more time and/or money (either as cash or in the form of salary for an additional person on the project team). You will sometimes hear this referred to as a "risk reserve" — jargon that means a pot of extra time or money is included in the project plan, even though there is no actual task assigned to that time or money. The risk reserve will be used if something goes wrong.
- Backup plans. These are probably already familiar to you as the proverbial Plan B — what you will do if Plan A fails. This type of mitigation is often combined with frontloading: You attempt your risky Plan A as early as you can, so that you have time to try Plan B if needed.
- Bailout points. Sometimes, the best way to mitigate a risk is to think ahead about when you’ll stop trying to make something work, and either cut your losses or move on to the aforementioned Plan B.
- Management practices. Often, there are specific steps you can take to make a negative outcome less likely or disruptive. Perhaps some extra training for certain team members will decrease the likelihood of a technical risk occurring. One great way to mitigate the loss of a key staff member or colleague is to cross-train your team. (Bonus: People usually like being cross-trained because it makes it easier to take vacations and the extra skills look good on their resumes.) Paying more attention to your communication strategy can reduce the risk of misunderstandings at project handoff points.
Once you have drafted your list of mitigations, the final step is go down that list and think about which ones are "worth it." If you were using a formal risk-analysis method, you’d assign a cost to each of your mitigations and then plug that figure — along with likelihood and impact scores — into a formula that would spit out an answer telling you whether or not to include the strategy in your plans. In practice, I have seen those formulas gamed more often than not.
Instead, I recommend just looking at all the information you’ve gathered about your risks and mitigations, and making a call about what it makes sense to do. You probably have more intuition in this area than you realize, because most of us instinctively do risk-mitigation calculations in the nonwork areas of our lives. For instance, every time you decide whether or not to buy a warranty on a new electronic toy, you’re doing this calculation in your head.
You have probably been intuitively doing some sort of risk analysis in your work life, too. The benefit of moving to a more explicit analysis (but one that is more qualitative than quantitative — unless you like to play with numbers) is that it encourages you to acknowledge when you’re making overly optimistic assumptions. And this gives you a better chance to make plans that will withstand the failure of at least a couple of those assumptions.
Bringing your risk analysis out from the realm of intuition can also help you overcome a tendency to be overly risk averse. It is easier to go ahead and take a big risk when you know that you have mitigations in place and a backup plan if things go pear-shaped.
Thinking about risk can be a bit scary, but really, ignoring risk is the riskiest behavior of all.