Agile Risk Management: How to Manage Risks More Proactively

1 June 2024

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Agile Risk Management

In today’s unpredictable business environment, companies face daily threats that could potentially impact their assets (financial, physical, and/or people) and strategic interests. Mitigating these risks has become a critical aspect of any organization’s strategy to ensure business continuity and profitability. With the evolution of project management frameworks (such as PMI, PRINCE) and standards (like ISO 9001), Risk and Opportunities (R&O) Management has gained widespread recognition. However, with the rise of digitalization and the adoption of agile methodologies, organizations are rethinking their traditional R&O management processes.

In this way, applying Agile project management introduces an innovative strategy of breaking projects down into small, achievable objectives. This article outlines four effective strategies to mitigate risks and protect your company, using agile methods that can enhance risk and opportunity management in today’s business world.

Understanding the Agile Mindset

The Agile Alliance’s Agile Manifesto lays out a set of principles that shift the focus of work from rigidly following processes and documentation towards prioritizing customer satisfaction. This is achieved by promoting value creation, respect for people, waste minimization, transparency, adaptability, and continuous improvement. By pursuing these principles, businesses can deliver quality products and services in regular increments. This way, the team can make minor adjustments and evaluate the relevance of the product, the efficiency of the team and the feasibility of the product.

In practical terms, this means that teams work iteratively, analyzing after each work increment:

Relevance: Are you making the right product?

Efficiency: Does team’s workload vs production capacity demonstrate efficiency?

Feasibility: Can the product be achieved in this way?

The ultimate objective is to maximize value and minimize risks through flexibility, shorter feedback loops, and adjusting processes based on customer feedback.

Challenges of Traditional Risk Management and How Agility Can Help

Traditional risk management practices may employ a rigid, sequential approach, which lacks keeping pace with the dynamic changes characteristic of today’s project landscapes. Such an approach can result in outdated risk evaluations, missed opportunities, and poor stakeholder engagement.

Conversely, Agile Risk Management adopts a flexible, adaptive strategy that is ideally suited to the unpredictable dynamics of many projects today. By weaving an Agile framework into risk management processes, teams gain the ability to continuously reevaluate and reprioritize risks by leveraging more frequent feedback. This not only leads to more precise risk assessments but also enables a more efficient risk mitigation process.

How to Incorporate Agility into your Risk Management Processes

Incorporating agility into your risk management processes will guide you toward a more effective and resilient R&O management framework. Whether your projects are fully “Agile” or not, here are four strategies to do so:

1. Establish Regular Standups

The incremental approach to Agile allows issues to be detected early on. Whether it be team conflicts, quality, or performance issues, it is crucial to monitor any discrepancies right from the start in order to address the root causes of risks. Implementing daily standups¹ or retrospective sprints² for your team to identify these risks allows you to anticipate and manage risks more proactively, thereby enhancing project performance.

A brief, daily collaboration meeting where the team reviews the previous day’s progress, sets out the day’s intentions, and highlights any obstacles encountered or anticipated. This is known as Daily Standup.
Recurring workshops where participants explore their work and results with a view to improve the process and product.

2. Share Risks with the Customer

Positioning the customer at the core of the development process fosters a unique collaboration that is grounded in close communication and allows all stakeholders to align on their priorities and needs. Sharing risks with the customer might seem unconventional; however, it can strengthen the partnership. By focusing together on eliminating activities that add little value while seizing opportunities, both sides benefit from achieving a common objective.

3. Provide Your Team with Good Leadership

Agile teams must be accompanied by a “servant leader” to focus on their production increments as well as professional development. This role may be the project manager, Scrum Master, team leader, or team coach, depending on the organization. Nevertheless, this role facilitates team collaboration by distributing responsibilities based on knowledge and skillset and by removing team obstacles. The same is true for risk management; this leadership role ensures that their team follows the organization’s processes and has the training and resources they need to do so.

4. Ensure Transparent Communications

Risk mitigation often boils down to decision-making, especially when it comes to forming action plans. In order to make good decisions, the risk manager must consider a wide range of perspectives without succumbing to availability bias. Therefore, all relevant information must be easily accessible, and this can only be achieved by fostering a culture of open and transparent communication. Team members should be encouraged to report any potential issues and share knowledge to mitigate risks. Effective communication allows for actions to be taken quickly to both manage risks and minimize their impacts.

Agile Risk Management in Practice

MIGSO-PCUBED has been working with a global leader in radiocommunications, operating in the defense and security sectors by deploying Scrum Masters in agile teams who are developing information and communication systems for military radios. In this context, we have implemented numerous tools suited to agile approaches (i.e. CharmOnJira™, iObeya™, Kanban) to facilitate the reporting of Risks & Opportunities (R&O) across the entire integration, verification, and validation chain of their solution. Concurrently, we have also established daily, weekly, and monthly standups where all business teams are invited to share (or resolve) complex issues, thereby facilitating rapid decision-making.

Finally, R&O are also shared across the different levels of the organization through more traditional reviews held monthly and facilitates risk mitigation that the business teams alone could not address. This improved communication allows the business to cope with sudden and unexpected changes, such as new client requests and market developments, through short cycles that enable rapid identification and analysis of each new R&O. As a result, this new approach to risk management led to the qualification of one of their information systems within just one year, prompting our client to continue partnering with MIGSO-PCUBED and apply this methodology to other ongoing projects.

Conclusion

Identifying and mitigating risks seems inherently proactive; that is, anticipating what could happen in order to take measures against it (or for it in the case of an opportunity). Nevertheless, this process can become less proactive as more project work piles up and fewer reviews for risk take place. That’s why incorporating an Agile methodology can be so beneficial. Agile Risk Management is more proactive approach that encourages stronger collaboration among project stakeholders. It allows for regular feedback on risks and making adjustments accordingly. Nevertheless, it is important to have a robust process in place to implement and monitor mitigation plans while communicating outside the team about potential threats that could impact the company. Finally, to remain effective over short iterations, you need a servant-leader to facilitate the process and avoid bottlenecks.