When you understand the premise and purpose of projects you can get a good grasp on the fundamentals of risks and where they sit on any given continuum.
Sometimes we see things through a specific lens and not necessarily in the same way that others are viewing the same situation. When planning risk treatments, we need to take into account the perceptions of others, particularly the principles in our stakeholder group. Not only does this improve your management ability, it also helps you become an effective facilitator of the challenges that arise from the juxtaposition of projects with standard operations. Risk is contextual however and projects, created to realize opportunity, have to exist on a continuum counterbalanced by a standard operating world sustained by steadiness, stability and conventionality. You may have heard about risk profiling in investment portfolios. Your return on investment can be linked to how much risk you are willing to take. The potential rewards are deemed relative to that risk - a conservative stake, for example, is a kind of risk treatment that keeps you safer and yields lower returns. Projects can function in similar fashion.
In project lifecycles, during initiation, we risk up-front financing, which needs to cover every cycle and keep the project rolling until it comes to a close or is handed over to an end user or new owner. How we treat that risk or any other risk during delivery is impacted by how we view the world and where we sit within that world. Taking risks is about generating rewards.
How you interpret and treat the risks can define the rewards you gain and the success ratios you achieve. The risks of car ownership, for example, can be diminished by the relative rewards of privacy, freedom, safety, leisure, convenience, flexibility and time saving. All of these points help to confine risk in vehicle ownership to the realms of vehicle technology. One aspect of that, the three-point seatbelt, a standard feature in automotive manufacturing for 60 years, was invented by Nils Bohlin at Volvo in the 1950s.
Volvo took a risk by making driver and passenger safety a core part of its brand at a time when this was an afterthought for many car makers. A scientific study by Bohlin, published in 1967, covered 28,000 road traffic accidents, demonstrating that unbelted occupants sustained fatal injuries throughout the whole speed scale. Amazingly, of the 37,511 people involved in those accidents, no passengers wearing a 3-point seatbelt had died, unless traveling at very high speeds—above 60 mph.
Automotive innovations can cost millions of dollars in research and development. The risks of innovating improvements to the standard two-point seat belt were magnified by the need for an emotional paradigm shift in the people who were supposed to wear them. Even with human safety as a primary motivator for the project, there was no guarantee that manufacturers would adopt the design or people would wear them.
Ultimately, Volvo were on the right side of history with quantifiable successes. It is estimated that since 1959, the three-point seatbelt has saved hundreds of thousands of lives, reduced injury severity for millions and saved billions of dollars in insurance losses. The rewards for Volvo were revenues of $1 billion by 1978 and hypothetical royalties from the seat belt patent of $400 million; remarkably after sponsoring the R&D and Bohlin's patent, Volvo gifted the designs to their competitors to encourage mass adoption and save lives. Whilst this innovation was well sponsored by corporate stakeholders, this solution took 9 years to come to market and even then, was not globally embraced.
By 1996, 32% of people in the U.S. were still refusing to wear seat belts.
Ironically, automobile safety concerns emerged 20 to 30 years after the first gasoline vehicles were invented and U.S. road safety campaigns dating back to the 1920s evolved to remedy speeding, reckless driving, collisions, and pedestrian fatalities (which) were new problems requiring new solutions.
In sum, risks are inherent in any project and with the right treatment and support can yield expected and unintentional outcomes.
To this day, the three-point belt's basic design hasn't changed... and has since gained inertia reels (which lock the reel during hard deceleration), pretensioners (which quickly cinch the belts tight during an impact), load limiters (which reduce forces on an occupant's chest by allowing the belt to pay out in a controlled manner during a crash).
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