How to Sell Risk Management to a Project Sponsor

The Risk Management Dilemma

According to PMI's 2017 Pulse of the Profession report, only 28% of project managers always use formal risk management processes. Even more alarming, 14% rarely or never engage in risk management at all.

The reasons for this vary, but a common theme is the resistance from project sponsors and senior management. Often, these decision-makers perceive risk management as bureaucratic overhead that delays project work and adds little value. They may believe their project is straightforward, the risks are apparent, or that experienced teams can handle issues as they arise. Yet, proactive risk management is a practice that can mean the difference between project success and failure.

Why Sponsors Resist Risk Management

Understanding the root causes of resistance is the first step in addressing it. Time pressure is a frequently cited reason. Sponsors are often under pressure to demonstrate quick progress, and risk management feels like a delay. Furthermore, many sponsors may not fully understand how risk management adds tangible business value, perceiving it as a focus on negative and worst-case scenarios rather than constructive planning and risk mitigation. It's crucial to understand these reasons to develop a comprehensive approach to risk management.

Another factor is cultural. Some organizations have a "firefighting" culture, where reacting to issues is the norm. Proactive discussions of problems may be seen as pessimistic or even counterproductive. Additionally, some sponsors might believe that discussing risks will create unnecessary anxiety among stakeholders or reveal uncomfortable truths they would rather not confront.

The Business Case for Risk Management

To overcome these objections, the project manager must present a business case for risk management. Risk management is like a project insurance policy. It enables the team to identify potential threats and opportunities early, assess their impact, and develop proactive strategies to address them.

The cost of unmanaged risks can be devastating, including missed deadlines, budget overruns, and dissatisfied stakeholders. Equally significant are the 'soft' losses, such as reputational damage. For instance, consider a technology implementation project that overlooks integration risks with existing systems. If this issue surfaces later, it may require significant rework, more funding, or result in project failure.

However, what's often overlooked is the potential for missed opportunities. Effective risk management can also uncover hidden opportunities. By analyzing potential risks, teams might identify more efficient processes, negotiate better contracts, or leverage emerging technologies to their advantage.

Framing the Conversation: Seven Key Questions

Rather than lecturing sponsors on risk management, project managers can engage them in a dialogue using seven carefully crafted questions. These questions help sponsors reflect on the broader implications of ignoring risks and gently guide them toward seeing the value of risk management.

1. What are the consequences if this project doesn't succeed?
   This question moves the conversation to a strategic level. By considering the consequences of failure, sponsors are more likely to proactively protect the project's success. In some projects I’ve encountered, the resulting discussion also preserved the amount of time necessary for robust planning.
2. Can we spare half a day to ensure project success?
   Time is often the main objection. Framing the initial risk assessment as a brief, focused session positions it as a high-return investment. While a half-day may seem insignificant, I recommend taking the win and putting it to good use. This will pave the way for future discussions and the expansion of risk management practices.
3. How do stakeholders feel about the risks associated with the project?
   Stakeholder sentiment can expose hidden concerns. This question encourages sponsors to consider the perspectives of those who may have concerns or insights that need to be addressed early.
4. Are there any threats or opportunities we should be aware of as we start the project?
   This frames risk management as a balanced process that mitigates threats and capitalizes on opportunities. The sponsor’s interests are aligned with their interest in maximizing project value and meeting goals.
5. Are we certain the project scope is well understood, and all assumptions have been identified?
   Scope clarity is crucial, and this topic warrants discussion before project execution. Unexamined and unfounded assumptions often lead to unanticipated risks. This question highlights the connection between scope definition and effective risk management.
6. If we don't use a risk management process, how will we identify the appropriate contingencies for the budget and schedule?
   Budget and schedule buffers are often arbitrary without a structured approach to risk. This typically results in waste from unnecessary padding. According to Parkinson’s Law, the work will continually expand to fill the allotted time. The question highlights that informed contingency planning necessitates a systematic risk analysis.
7. Are there any cultural or business issues within the organization that could affect project success?
   Organizational dynamics can be significant sources of risk. Encouraging candid discussion about internal politics, resource conflicts, or competing priorities can surface significant considerations that may need to be addressed as the project progresses. For example, this discussion led to the preparation of some documentation that explained why a project wasn’t following “norms” and how it would succeed.

Shifting from Objection to Agreement

Once these questions have opened the sponsor's mind to the realities of project uncertainty, the next step is to address remaining concerns. Active listening is crucial. Understand the sponsor's priorities and tailor your messaging to align risk management with their objectives. For example, if time is critical, highlight how potential opportunities may shorten project time.

Translate risk management into business language. Instead of discussing risk assessment matrices or risk registers, discuss protecting return on investment, safeguarding the organization's reputation, and ensuring strategic alignment. Sponsors care about outcomes; demonstrate how risk management contributes directly to achieving those outcomes.

Another effective tactic is to propose a scalable approach. Emphasize that risk management doesn't need to be overly complex or time-consuming. Suggest starting with a lightweight process. A pilot approach allows sponsors to experience the benefits with less anxiety.

Demonstrating Quick Wins

Once initial buy-in is secured, it's essential to demonstrate quick, tangible benefits. Conduct a short, focused risk identification workshop with key stakeholders. Capture and prioritize risks in a simple risk register. Share early insights with the sponsor to show how this exercise has already uncovered actionable issues.

For example, an early risk discussion might reveal that a critical supplier contract has not yet been finalized. This insight enables the team to engage with procurement and proactively avoid potential delays. Quick wins like these reinforce the value of risk management and build confidence among sponsors.

Embedding Risk Management as an Ongoing Dialogue

Risk management should not be a one-time event but a continuous process integrated into project governance. Propose periodic risk reviews aligned with major project milestones. Keep the sponsor informed by regularly updating them on the risk status and progress of mitigation.

Unanticipated problems may also arise during the project. I’ve often found that risk management discussions harbor potential solutions worth considering. This is another “win” that can be shared with the sponsor.

By maintaining ongoing dialogue, you foster a culture of transparency and shared accountability. Sponsors become active partners in managing risks rather than passive observers. Over time, this approach helps integrate risk management into the project delivery process.

From Reluctance to Partnership

Selling risk management to a skeptical sponsor requires empathy, persuasion, and strategic framing. By focusing on business value, engaging sponsors with thoughtful questions, and demonstrating quick wins, project managers can turn resistance into partnership.

Ultimately, risk management is not about slowing down the project or fixating on problems. It's about ensuring that the project reaches its objectives with fewer surprises, better outcomes, and greater confidence. As project managers, it is our responsibility to guide sponsors toward this understanding, ensuring that every project we lead stands on the strongest possible foundation for success.