PM ADVISORY:

RISK DOCTOR BRIEFING

Optimism, Pessimism, Realism & Risk

By Dr David Hillson
The Risk Doctor

The former British Prime Minister Winston Churchill once said that “A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” This exposes an interesting link between pessimism, optimism and risk attitude. One result of pessimism is an undue focus on threats which could lead someone to become risk-averse, wanting to avoid or minimise negative outcomes wherever possible, and becoming over-protective. On the other hand, optimism can produce an excessive concentration on opportunities, which can result in a risk-seeking attitude, looking for the upside in every uncertainty, and taking on too much risk exposure.

Always being either pessimistic or optimistic will not help us to be fully effective in managing risk. If we only look for threats we will miss potential benefits. But an exclusive focus on opportunities will result in problems happening that could have been avoided. Instead we need a proper balance between both perspectives, allowing trade-offs between threats and opportunities, in order to give us the best possible chance of achieving our goals. In place of pessimism or optimism, we need to aim for realism.

A realistic view of the situation will seek out both bad and good risks, including threats and opportunities. Both of these types of risk need to be identified and assessed so that we can develop and implement effective responses which will avoid or minimise threats while capturing or enhancing opportunities.

The following steps will help us to ensure realism in our approach to managing risk:

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About the Author Dr. David hillson Author Dr David Hillson, PMP FRSA HonFAPM FIRM FCMI, is internationally recognized as a leading thinker and practitioner in risk management. He is Director of Risk Doctor & Partners (www.risk-doctor.com), and has worked in over 40 countries. He is a popular conference speaker and award-winning author on risk, with six books on the topic. David has made several innovative contributions to improving risk management, and is well known for promoting the inclusion of proactive opportunity management within the risk process, and for his ground-breaking work in risk psychology. David is an Honorary Fellow of the UK Association for Project Management (APM) and past chairman of its Risk Management Specific Interest Group. He is an elected Fellow of the Institute of Risk Management (IRM), the Royal Society for the Encouragement of Arts, Manufactures and Commerce (RSA), and the UK Chartered Management Institute (CMI). David is also an active member of the Project Management Institute (PMI) and was a founder member of its Risk Management Specific Interest Group. He received the PMI Distinguished Contribution Award for his work in developing risk management over many years. Since 1998 he has been a core author for the risk chapter of the PMBOK Guide®, and is a core author for the PMI Practice Standard for Project Risk Management. David can be contacted at david@risk-doctor.com. To see his latest book, Managing Risks in Projects, published in July 2009 by Gower, visit http://www.gowerpublishing.com/isbn/9780566088674.