Upside Risk

The meaning of "risk" generates ongoing debate, with some experts questioning whether it must always have negative connotations. Typically, "risk" refers to the possibility of something uncertain going wrong, resulting in damage or loss. The common practice of risk management is to anticipate and prevent these sorts of threats before they occur, enabling businesses and projects to achieve their goals. However, concentrating solely on threats limits the potential benefits of your risk management process, as opportunities can also arise unexpectedly and can be highly advantageous.

An opportunity (sometimes called an "upside risk") is "an uncertainty that could have a positive effect" and is the opposite of a threat. You must consider both to manage risk effectively in your project or organization. Doing so allows you to take advantage of beneficial outcomes as well as avoid unfavorable ones. Many experts and organizations now recognize the value of this approach.

Understanding that opportunities are more than just the absence of threats is essential. Sometimes, good things happen for no apparent reason or without any connection to a threat. These "pure opportunities" should also be identified and pursued to help achieve objectives.

Let's consider a simple example of an upside risk. A common threat (or "downside risk") in a software development project is for a task to overrun its schedule. Typical response strategies include the allocation of additional resources or the de-prioritization of other tasks. Conversely, an "upside risk" might be that the task takes less time than planned. Response strategies could include using the newly freed-up resources to work on tasks previously pushed into phase 2.

In the realm of risk management, a well-rounded approach that considers both risks and opportunities provides a more comprehensive and proactive framework. By actively seeking out and capitalizing on opportunities, we can enhance the overall outcome of our projects and organizations, moving beyond simply mitigating threats to fostering growth and innovation.

Risk Register by ProjectBalm is a proven tool that helps you record and manage your risks.