In our new White Paper “The True Risk of Complex Projects: Teachings from Statistical Theory” [2012-24] we draw on the knowledge of risk theory to explain why the risk of Complex Projects is significantly different from the risk of Simple projects. The interdependency of contributors, which is the mark of complexity, leads to mathematical properties of the resulting risk which is often overlooked by decision makers: higher probability of large failures, and a high influence of correlation.
Measuring Risk
The paper in itself is a bit for math geeks. Here’s the summary: everything that you were told about risk is wrong! As well as your intuition, repeatedly shaped by this wrong view of risk.
Without knowing much about the system other than it is a complex system with a lot of interdependent elements, we know the outcome probability distribution is a ‘power law’ curve. And such a statistical distribution will behave very differently from the usual Gaussian distribution: freak events do happen! It also explains why a single bad project can bring a project company to its knees: the reality of complex projects is that really disastrous projects occur far more often than predicted by common knowledge.
The consequences of this mathematically demonstrated situation are far reaching.
The traditional economic protection offered by aggregation of project risk at the organization level does not really work when it comes to complex projects.
Get these important insights in our new White Paper “The True Risk of Complex Projects: Teachings from Statistical Theory” [2012-24] and you’ll see the world of project risk under a very different light!
