A look at the Project Risk Analysis and Management Guide 3rd Edition

Over the last 12 months I’ve seen a distinct shift in the conversations around risk management. Not so much in the workplace but at conferences, debates, magazines and online. I hope I’m not alone in finding this concerning.

I have always talked about “Risk Culture” and how good and poor behaviours within the P3M domain inevitably impacted the results (output) that a team are trying to achieve. Here the resonance begins – the old adage “Rubbish in, Rubbish out.” For me, a “Good Culture” is one where the data you’re using is quantified with solid, sound basis of estimates and reasonable assumptions that are grounded. It’s about the c-suite understanding what risk management is and the effect it can have in decision making. It’s also about understanding that good risk management is about not only looking at the “threat” picture but also the “opportunity” picture in equal measure (Ok, there are variations on threat vs opportunity).

So, we fast forward 12 months and we now have two significant discussion point. One around risk culture and the second around AI. “So what?” I hear you cry. Well, I believe the “so what?” is in the detail of the culture. Hear me out on this one; the 2024 Risk Interest Network (RIN) Conference was about “The Human Element”, specifically in risk management and crisis management. How we, as humans, react to stress and differing situations that we may not be used too. Of all the fantastic guest speakers, the one that really caught my attention was the closing speaker. They talked passionately about the use of AI and its application in data handling and risk management. The one thing that really stood out was their closing comment. Concisely, the way AI works is by data gathering and then giving a precis – the real stand-out was their observation that the output was only as good as the input (Rubbish in, Rubbish out).

The RIN Conference was specifically themed to coincide with the upcoming update to the PRAM Guide. The team not only updated the guide to incorporate the latest techniques, but we also concentrated on the role of the risk manager and their interactions with the rest of the P3M community, our behaviours. We were able to bring together some of the most experienced practitioners, academics and leaders to make the PRAM guide one of the most pertinent and focused yet. You will note that this iteration of the PRAM Guide doesn’t go into detail about AI, and for good reason. As the initial drafts were being written AI had not taken the giant strides it has done. This is not a terrible thing, in fact, I would say that we have set up the narrative to concentrate on the maturing our risk cultures and behaviours and then we can confidently discuss the benefits and opportunities that using AI will bring.

I asked AI (a well-known platform) to answer the question “What does AI bring to Risk Management?” the answer I got was:

AI brings several significant benefits to risk management by improving the ability to predict, identify, assess and mitigate risks across various industries. Here are some of the key contributions AI makes to risk management:

Predictive Analytics:

Risk forecasting:

Anomaly detection:

Real-time Monitoring:

Continuous surveillance:

Automation of risk alerts:

Enhanced Decision-Making:

Data-driven insights:

Scenario modelling:

Fraud Detection and Prevention:

Financial fraud detection:

Cybersecurity threats:

Risk Assessment and Mitigation:

Risk quantification:

Optimizing mitigation strategies:

Regulatory Compliance:

Automated compliance:

RegTech (Regulatory Technology):

Cost Efficiency:

Operational efficiency:

Optimizing resource allocation:

Improved Scenario Planning:

Risk scenario analysis:

Stress testing:

Automating Routine Risk Management Tasks:

Risk reporting automation:

Document analysis:

Enhancing Human Expertise:

Augmenting human decision-making:

In summary: AI revolutionises risk management by enabling faster, more accurate identification of risks, better decision-making, real-time monitoring and more effective mitigation strategies. By leveraging AI, organisations can enhance their resilience, anticipate potential threats and respond proactively to risks.

Wow, all that from a simple, or not so simple, question. Oddly (and by total coincidence) the PRAM Guide very much has a feel of the AI answer.

I’m looking forward to embracing AI in all its forms, and I hope you are too. But we always need to remember – rubbish in, rubbish out.

In the meantime, to come on the APM Risk Interest Network journey with us, purchase the Project Risk Analysis and Management Guide 3rd Edition today.