Software Tools and Data Democratization
In the last decade, a surge in project professionals gaining access to once-exclusive risk analysis software has marked a shift toward data democratization. While widening access is a positive development, challenges arise when insufficient attention is given to both risk theory and the quality of risk data.
Douglas Hubbard, author of "The Failure of Risk Management: Why it’s Broken and How to Fix It," emphasizes the importance of understanding risk theory. Without proper care, risk information can be "worse than useless," leading to misdirection and self-inflicted harm—a concept encapsulated in the GIGO principle, or garbage in, garbage out.
Effective risk management goes beyond analysis; it involves proactive action, continuous learning, and updating plans for predictable outcomes. Pitfalls emerge when teams generate and process risk data without a solid foundation in risk theory, leading to biased terminology, noisy processes, and inadequate project simulations.
How to Navigate the Pitfalls of Data Democratization
Best in class risk software, like Safran Risk, provides a structured framework aligned with recognized best practices. It enables teams to capture and curate risk data at all project stages, addressing the need for ongoing risk management. Unique features, such as Global Risks, which allows organizations to share empirical or reference class data and account for common, recurring systemic risk that, to some degree, can better account for the impact of unknown unknowns, which some may describe as black swan events.
A black swan event describes an event that comes as a surprise, has a major effect, and is often inappropriately rationalized after the fact with the benefit of hindsight.
ISO 8000-8:2015 outlines fundamental concepts of information and data quality. While modern software addresses syntactic and semantic data quality, pragmatic quality depends on an organization's risk culture, processes, experience, and consistency in applying risk theory. Pragmatic quality directly correlates with an organization's ability to comprehend and apply sound risk theory, making it a crucial human attribute.
Ensuring Traceable and Reproducible Solutions
Sound risk theory demands critical decisions based on objective, quantitative inputs that are mathematically unambiguous. Quantitative risk analysis tools like Safran Risk are essential for creating fully traceable and reproducible risk simulations. Whereas quantitative tools enable independent verification by parties like alliance partners, insurers, financiers, or investors, Hubbard warns against the use of qualitative scoring due to its unintended effects, such as imprecise scoring bands, psychological biases, and the inability to model correlations.
Risk practitioners use additional tools and techniques to ensure pragmatic data quality. Employing a risk metalanguage to describe events aids in brainstorming and minimizes miscommunication. Techniques like the Delphi method or one-on-one interviews mitigate biases in conventional risk workshops, addressing issues like groupthink, the Moses factor, and cultural conformity. Safran Risk ensures schedule readiness for analysis by testing compliance with critical path methodology (CPM) best practices.
Equipping Your Teams with Safran Risk
To empower your organization with top-tier risk management software for capturing and modeling uncertainty, Safran's experts are ready to assist. Contact us to discuss your current project risk management capabilities with a trusted advisor. Embrace data democratization while navigating the complexities of risk theory with a tool designed to enhance your team's efficiency and decision-making.
If your organization is facing uncertainty with projects, and seeking ways to embrace continual improvement, our top tier software tools can help you manage critical project risks. If you want to optimize your organization’s ability to manage successful projects, contact us to find out more about Safran Risk, and let us tailor a strategy so you can improve your risk management capability with the guidance of a trusted advisor.