How Do You Assess Risk Program Effectiveness?

by Carl Pritchard

Time and again, these pages emphasize that risk is a unique experience. It is unique to the project manager, the project, the team, and the organization. It is unique to the time in which it occurs. It is a one-of-a-kind drill. And yet there is increasing pressure being brought to bear to quantify the value of risk management practice and process through metrics. Quantifying risk processes is challenging at best, given risk's unique nature. But there are two practices that can be applied to establish the relative value of risk management. One is being applied in organizations that consider themselves sufficiently diverse and unique that they cannot establish a fixed dollar value to their risks-risk modeling. Another is being applied (often in the utility industry) using the potential costs of the risks identified as a determinant for what should and should not be the responsibility of the utility's ratepayers. In both instances, there are metrics to identify the relative value of risk processes to the organization.

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How Do You Assess Risk Program Effectiveness? November 2002