Manage Risk Like a Formula One Driver

“Twenty-five drivers start every season in Formula 1, and each year two of us die. What kind of person does a job like this? Not normal men, for sure. Rebels, lunatics, dreamers. People who are desperate to make a mark and are prepared to die trying.” –Daniel Brühl as Niki Lauda (Rush, 2013)
I attended my first Grand Prix in 2000 at the Indianapolis Motor Speedway, and quickly became a Formula One (F1) enthusiast. I have attended several Grand Prix races in Asia, North America and South America; visited iconic F1 destinations such as Autodromo Nazionale di Monza and the Ferrari factory in Italy; and even met a few World Drivers’ Champions.

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Over the years, I have noticed that F1 and project management are very similar. Every race of the season is a milestone. Engineers, designers and mechanics work for the driver, who is always looking to minimize risk and maximize opportunities — just like the project team and a project manager.
Mr. Lauda, with 25 wins, one of the greatest F1 drivers, is well-known by racing fans for two things: his rivalry with James Hunt and his accident on 1 August 1976, during the German Grand Prix Nürburgring.
During the 1970s, Nürburgring was the season’s most dangerous circuit. It was known as “the Graveyard” and had claimed the lives of five drivers. In the 1976 race, the weather conditions were far from ideal. Mr. Lauda called a meeting with the rest of the drivers to vote to cancel the race. The drivers understood that the Nürburgring ring required perfect weather conditions to be even remotely acceptable in terms of risk. Due to Mr. Lauda’s position in the F1 standings, canceling the race would’ve benefited him, but he was more concerned about the danger.
The race went on despite the rain. During the race, Mr. Lauda’s car went off the track and his fuel tank punctured, setting his car on fire. He was trapped for almost a minute in a searing inferno before other drivers could rescue him. Mr. Lauda suffered burns to his face and smoke inhalation.
As with race car drivers, project managers face risk with different levels of severity. A project manager’s risk tolerance level depends on different factors: organizational culture, national culture and experience. It’s not only imperative that we provide early identification and assessment of risks — the point is to know and stick to a risk threshold. We may face hardship for accepting the risk and not being successful, but we need to learn the lesson and move on. As Mr. Lauda said: “I accept every time I get in my car that there is a 20 percent chance I could die, and I can live with [that risk] — but not 1 percent more.”

Another lesson in risk management from Mr. Lauda comes not long after his crash. Like a phoenix, 42 days after his near-fatal accident, he went back to the track and kept fighting Mr. Hunt for the championship. The Japan Grand Prix, the last race of the season, would crown the next World Drivers’ Champion. Again, weather conditions were poor, delaying the race for several hours. While it was still raining, Mr. Lauda started the race but quit after a few laps. His team was surprised to see him coming back to the pit stop and asked him what was wrong with the car. Whie the car was in perfect condition, Mr. Lauda assessed the risk as too high. And when the team tried to present a technical justification for his quitting, Mr. Lauda told them to tell the truth: that he made the decision based on the weather. He had reached his risk threshold and decided to leave his championship hopes to other drivers — including Mr. Hunt, who garnered enough points to beat Mr. Lauda and take the top prize.

We project managers are paid to decide the future of projects, programs and portfolios. Sometimes, those decisions are difficult to accept — by sponsors and stakeholders, not to mention ourselves — but will provide long-term benefits to our organization. And canceling or postponing a project, program or portfolio will not prevent our professional career from progressing — on the contrary, it can reinforce our knowledge and experience. After the Japan Grand Prix, Mr. Lauda continued his successful racing career and became champion in 1977 and 1984.
I have my own experience of approaching risk management by determining the environment and sticking to thresholds. When working on a regional project in Central and South America in 2010, the project faced a geopolitical risk that slowed down progress. But in many countries in the region, 2010 was a presidential election year. This event usually contracted economic activities months before the election and sometimes even after. As elections impacted different countries at different levels, we had to define and implement contingency plans for some; for others, we accepted the risk, and yet for others, we didn’t accepted the risk and suspended the project temporarily.
How do you face risk? Are you a risk taker or a risk-averse project manager? And how do you define acceptable risk?

The views expressed within the PMI Voices on Project Management blog are contributed from external sources and do not necessarily reflect the views and opinions of PMI.

Article source: http://blogs.pmi.org/blog/voices_on_project_management/2014/06/manage-risk-like-a-formula-one.html

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