Rethinking Risk and Looking Ahead to Antifragility

Rethinking Risk and Looking Ahead to Antifragility

Insights | 24 July 2018

Ideally, all projects would align with the strategic objectives of the organisation and deliver benefits, on time and within budget. All risks would be fully accounted for and appropriately hedged against upfront.

This is obviously way too good to be true. But what if the business risks of the future can’t be quantified – or managed at all, meaningfully – using traditional project management tools?

What if we need a whole new paradigm around risk and its relation to real-life outcomes?

There is a concept which is gaining popularity within project management circles, especially when discussed in tandem with popular concepts like “black swan” failure and “antifragility”. Computerweekly.com[1] last year argued that the way we manage risk today is “rear-view” thinking at best, and at worst powerless against the kind of catastrophic failures that are impossible to predict ahead of time.

The father of antifragility and so-called “black swan” failures is author Nassim Nicholas Taleb, whose popular books, “The Black Swan: The Impact of the Highly Improbable” (2007) and “Antifragile: Things That Gain from Disorder” (2012) have influenced many notable thinkers in this area of project management.

If you are new to the concepts, a black swan failure is a immense failure impossible to predict upfront. Taleb’s concept of antifragility is described as such: “Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better.”[2]

What is antifragile project management?

Antifragile project management is all about incorporating concepts of antifragility into the practice of project management.

There are already a large number of supporters for this concept. One such author suggests that traditional risk management has become synonymous with restraining change as to be useless to most modern businesses.[3]

“In today’s world where enterprises themselves have to become more nimble and take risks rather than avoid them, having a project management function faced in the opposite direction is not exactly going to improve its influence, nor will it be seen as the ‘go to’ function for all the changes an organisation may want to (or may have to) bring in,” writes Roland McLain-Smith, the author of “The Project Manager’s Little Book of Assumptions.”[4]

McLain-Smith goes on to advocate for a new culture of risk built on antifragile systems.

These new systems feature a “constant need to simplify”, while supporting failing and the promotion of strong feedback loops, he writes.

How can you manage risk better?

Can you incorporate concepts of antifragility into your projects today? Most proponents seem to repeat a core group of key takeaways which can help you get started:

  • Redefine failure
  • Test and learn
  • Think small

Let’s consider the last concept, the power of staying small (or at least assessing risk in digestible pieces), in further detail. Big projects equaling big risk is a theme that is often repeated by thinkers in this space. Bent Flyvbjerg’s book “Megaprojects and Risk: An Anatomy of Ambition” is a widely cited source on this concept. Flyvberg, a management professor at the University of Oxford’s Saïd Business School, believes in an “iron law of megaprojects: … over budget, over time, over and over again … the survival of the “unfittest”.[5]

Agile practices have a far better shot at addressing some of these systemic issues with risk vs. traditional waterfall project, some believe.

According to writers at the software development blog Hackernoon[6], the culprit is “big planning.”

“Waterfall is big planning upfront,” they write. “That size makes it easy for lots of tiny, non-linear problems to arise and multiply the cost of a project. Agile hits those same problems, but it encourages making adjustments as you go… Another antifragile aspect of agile is its retrospectives. You take time to talk about what didn’t work or what slowed you down, and you change it. Over time, your team improves.”

What’s next?

Concepts like black swan failures and antifragility are contributing to our understanding of risk in meaningful ways. For project and programme managers looking to redefine risk, the challenge will be to take a hard look at all the ways projects become “too big to fail” and how avoidance of risk becomes the decision-making driver (which is generally not for the best of the project or the business).

Instead, see where concepts influenced by those re-thinking risk can make an impact. “Failing fast” isn’t just a phrase tossed around at start-ups. It’s a reframing of how to do business at a fundamental level, where small problems are identified and fixed before snowballing into larger issues. The result may be right-sized risk assessment and a common-sense approach to mitigating it.

Tell us, what are the measures your company have in place to help prepare for and mitigate risk? Call us today on +65 6818 5771.

[1] https://www.computerweekly.com/opinion/Rethink-risk-through-the-lens-of-antifragility
[2] https://fs.blog/2014/04/antifragile-a-definition/
[3] https://medium.com/@RolandMS/push-right-from-agile-to-antifragile-ba66a28181b
[4] https://medium.com/@RolandMS/push-right-from-agile-to-antifragile-ba66a28181b
[5] https://www.newyorker.com/news/news-desk/bertha-seattle-infrastructure-trouble-megaprojects
[6] https://hackernoon.com/antifragile-product-development-39b8d5866b77
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