Paper1

RISK INTERRELATION MANAGEMENT - CONTROLLING THE SNOWBALL EFFECT

Olli Kuismanen

EC Project Solutions Ltd., Finland

olli.kuismanen@ecprojectsolutions.fi

Tuomo Saari

EC Project Solutions Ltd., Finland

tuomo.saari@ecprojectsolutions.fi

Jussi Vähäkylä

EC Project Solutions Ltd., Finland

Jussi.vahakyla@ecprojectsolutions.fi

Introduction

We all know the story, ”everything was going just fine until the project hit one problem. This problem

accumulated other problems that accumulated other problems and soon the whole project was a

mess.”

During the years project risk management practice has evolved primarily around the assumption that

risks are independent entities that do not affect each other. Numerous tools and techniques have

been developed around this assumption. For some risks these tools and techniques work effectively

but in some cases they are trying to manage the wrong thing. In reality the risk environment is in

many cases a series of consequences, a risk network as Turner [1998] and Chapman & Ward [1997]

already have documented. In a risk network the risks affect each other giving more momentum or in

some cases negating each others’ effects. Managing these interrelations gives us the chance to

control the transfer of the risks in the network that really affect the project outcome. This paper

introduces Risk Interrelation Management (RIM) as a way for using risk modelling in controlling the

risk accumulation.

Risk Interrelation Management consists of identifying the causes behind the risks, finding the

interrelations between the causes and effects and the way they accumulate, defining an accurate

enough risk network and then finding a countermeasure for each of those interrelations. This way we

can really control the snowball effect; prevent one problem from becoming many problems.

This study is based on customer cases where the need for more thorough understanding of the risk

environment and the need for managing this “snowball...