How to Reduce Risk Evaluation Bias

2=Planning, 4=Control

Let’s look at different types of biases and ways to reduce risk evaluation bias. These steps will help ensure the right decisions are made for the right reasons.

We all have biases; many are helpful. In projects, we have biases towards successful projects and motivated teams. If a project sponsor says that schedule is the top priority, the project team has a bias towards meeting the schedule.

However, some biases are harmful. Stakeholders may attempt to sway project decisions in unfair ways. These biases undermine the health of the project and breed distrust.

Motivational and Cognitive Biases

Stakeholders may exhibit different types of bias. Motivational bias is where someone is trying to bias the result in one direction or another. Cognitive biases occur as people make inferences in an illogical fashion. Cognitive biases are based on people’s perceptions.

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How to Manage Bias

  1. Uncloak the bias. Project managers should watch and listen for bias. Expose the bias in one-on-one meetings or team meetings, whichever is most appropriate. Be careful – do not judge or challenge too quickly. Be slow to speak. Listen. Seek to understand.
  2. Have open conversations. When a bias is not understood, the project manager should dig deeper. If the bias is based on the wrong perceptions, provide the facts. If the bias is ill intended, ask non-threatening questions that allow the individual to understand how the bias may negatively affect the project.
  3. Reduce the subjectivity. Project managers use qualitative methods to evaluate risks quickly. Some project managers fail to understand that they may be creating greater bias. Let's look for ways to reduce the subjectivity while keeping the convenience and speed of the qualitative methods.

How to Reduce Bias When Evaluating Risks

For small projects, I use a KISS (Keep It Super Simple) Method for qualitative risk assessments. This one-dimensional technique involves rating risks as:

  • Very Low
  • Low
  • Medium
  • High
  • Very High

While the KISS Method is a simple and quick way to prioritize risks, it is also subjective and open to greater bias. When I use this method, I focus on open and honest conversations about the ratings.

A more common qualitative method is the two-dimensional Probability/Impact Assessment. With this method, we rate probability and impact on a scale such as 1 to 10, with 10 being the highest. This method provides a more in-depth analysis of risks as compared to the KISS Method. However, a scale of 1-10 is still highly subjective.

How can we reduce the subjectivity?

The first step is to define qualitative terms (e.g., Low – Very High) for the ratings. Here is an example:

Another step is to define ranges for the scale (e.g., 0-5% for Low). Defining the scale reduces subjectivity and drives greater consistency in the ratings.

If the probability or likelihood of a risk is approximately 15%, we assign a probability rating of 5. If the potential impact on the budget or schedule is 55%, we assign an impact rating of 9. The resulting risk score would be 45 (i.e., 5 x 9 = 45).

If stakeholders need objectivity, perform a quantitative risk analysis. Quantitative risk analysis takes more time than qualitative risk analysis. However, this method provides objective information and data for business decisions.

How About You?

Do you have a project where you think there may be some bias? If so, what can you do to reduce the bias and ensure better decisions? As you develop your project management plan, consider how you will address these potential issues.

About the author 

Harry Hall

My name is Harry Hall and I'm the guy behind the projectriskcoach.com and the author of The Purpose Driven Project Manager. Risks can derail projects, resulting in challenged and sometimes failed projects. I make project risk management easy to understand and practical to apply, putting project managers in drivers seat.

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