Project Risk Management and Complexity Theory

By P. Weaver

The outcome of projects is always uncertain and risk management has become a ‘hot topic’ in recent years. However, despite all of the interest, risk management remains one of the least appreciated aspects of modern management.

Whilst arguably the key competence (or competitive advantage) of every organisation is its ability to effectively manage the risks inherent in its environment; most organisations are excessively risk averse, and in their attempts to avoid ‘all risk’ expose themselves to more adverse outcomes than if they actively embraced and managed risk. No client can avoid the ultimate risks associated with its project such as the liquidation of its prime contractor; these major events inevitably impact the client and by attempting to quarantine itself from ‘all risk’, the client simply passes the benefit of any favourable outcomes to its contractor.

This paper (.PDF) briefly examines the development of ‘Complexity Theory’ from its origins in Chaos Theory to the ideas of ‘Complex Responsive Processes of Relating’ (CRPR) and seek to link the ideas within Complexity Theory to the practice of risk management so as to develop an understanding of risk and uncertainty from the viewpoint of complexity theory.