This strategy makes sense for common, easy-to-identify risks such as labor
shortages or shipping delays, but it’s useless for rare yet earth-shattering events
that may only occur once in a project
manager’s career, Mr. Lledó says.
To protect your projects, have a discussion with team members and executives, he suggests. Everyone must at least
be aware of the possibility of unexpected
risks. Then it’s time to create the best
possible contingency plan. Project teams
should make black swans part of every
risk-management consideration, Mr.
He accomplishes this by creating a
“black swan” category in his risk-management process and has his team identify the worst-case scenarios with regard
to cost, schedule, scope and quality.
“In the risk register, we might add
how to react if an oil pipeline explodes—
even though we do not have any idea
what negative risk would cause that
impact,” he points out.
EXPECTING THE UNEXPECTED
Instead, focus on how a team will respond
in a crisis.
“We are big on risk identification and
contingency planning. But if you ask
your project team to plan for an infinite
number of scenarios, it can have a declin-
ing return on investment,” says Brett
Pitts, senior vice president of the Internet
services group for the banking company
Wells Fargo, San Francisco, California,
USA. “It is difficult to try to anticipate
mitigation and contingency plans for
plagues, famines, wars and environmen-
tal disasters. For those types of things,
we count more on our robust business
As part of every project plan, teams
identify which elements on the critical
path could be affected by a crisis. Mr.
Pitts then clearly defines a process of
response, including who the key deci-
sion-makers are and who is responsible
for invoking contingency plans.
Since Wells Fargo acquired Wacho-via Bank for US$15.1 billion in late
2008, Mr. Pitts’ department has been
running all activities to integrate the
two websites, including product and
platform selection, system integration
strategies and monthly data-conversion
projects to transfer customer information from legacy products to the products that customers will be using after
If a black swan, such as an earthquake
where a key data center is housed, swoops
in on one of these projects, business con-
BIG RISKS IN THE SMALL DETAILS
Huge risks often hide in the corners of project plans. Seemingly innocuous tasks or events can unexpectedly wreak
havoc on a project because they represent an undiagnosed
bottleneck on the critical path, warns Bob Prieto, Fluor
Corp., Princeton, New Jersey, USA.
Many projects at construction and engineering giant
Fluor take place in remote locations and require project
leaders to create living quarters for workers. And while the
company has yet to experience something along the lines
of an outbreak of food poisoning, such an occurrence could
end up delaying the entire project, and impacting hiring
and retention of workers. “Failure to identify that seemingly minor risk could cause a standstill on the project,” Mr.
Most project teams are good at identifying big, obvious
risks, he says, but they don’t invest enough time exploring
the low-probability risks that arise from the interrelationships between tasks. “It’s the white spaces in-between
projects where black swans hide,” he says.
tinuity plans are invoked. These include
adjustments to ongoing operations and
The project team has an immediate response scenario already defined as
well. The first step is to convene a meeting with pre-determined stakeholders,
including regional executives from the
impacted market and senior leaders from
the bank’s Internet services group. “We
have a game plan already in place the
moment we walk into that discussion,”
Mr. Pitts says.
In a black swan crisis-aversion meet-
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