When conducting risk analysis for a new project do you leave out a major part of the equation – doing nothing? You need to consider the risk of doing nothing as well as the risk for new action.
The business world is moving forward very quickly and being left behind with old technology or processes is definitely a risk to your success. The secret is not to avoid risk, but to manage it.
But, as brought up in the article quoted below, if you are rewarded for success and punished for failure, the safest course for employees is often to keep the status quo.
Most executives know that the present value of an investment comes from projecting its cash flows and discounting those numbers into today’s dollars. The general rule is projects with positive net present values should get funded, and those with negative ones shouldn’t. That assumes, however, that the base case is zero. If doing nothing leads to decline, projects with marginal projections actually are better alternatives than inaction 4 Assumptions About Risk You Shouldn’t Be Making – Harvard Business Review
When creating a risk management plan, be sure to include ‘inaction’ as part of that plan.
Note: We have two live, instructor-led courses concerning risk management coming up that will be both in our Columbia, MD classroom or can be attended online (virtual):
IT Security Risk Management (12 PDUs)
Sept. 26 & 27, 9am-4pm Eastern Time
Managing the Project’s Risk (6 PDUs)
Nov. 2, 9am-4pm Eastern Time