TABLE OF CONTENTS Follow these steps and refine and reiterate as necessary until your organization has developed the correct set of parameters:
Train employees on the basic nature of risks and risk management. Warn them about the human nature tendency to rate all risks high, regardless of actual risk.
Have management take a risk tolerance test. Note your organizational risk distribution and conduct discussions to uncover the various risk profiles. Help the organization understand who is risk averse and who is risk seeking so that people will better understand one another's behavior and approach to various projects.
Develop specific consequence factors for your organization by phase (whatever phases are appropriate for your industry). Be sure to craft these consequence factors to include your strategic intents for each phase, keeping an eye toward propelling innovations through the Innovation Lifecycle. Try making the consequences slightly less catastrophic at each phase to encourage innovation throughput in non-critical (non-life-threatening) industries, and try doing the opposite in critical industries such as medical and transportation.
Commit enough funds and manpower to perform a quarterly or yearly risk portfolio. Rate all of the projects and programs and developments in your pipeline using the specially crafted consequence factors. Put all of this information in the 3DRM graph and analyze the portfolio. Look at your "sweet spot." Is it where you expected? Is it where you desired? Look at the areas where you have few projects under development. Are the number and level of risk what you expected? Are...
