Controlling chaos

Black swans--high-impact, low-probability events--are nearly impossible to predict. However, good contingency planning can mitigate the fallout. This article discusses how most risk-management processes use past data to predict future events. However, everyone must at least be aware of the possibility of unexpected risks. It reports on a senior vice president for a banking company who reveals that for every project plan, teams identify which elements on the critical path could be affected by a crisis. A process of response is also defined. Contingency planning is identified as one of the most-effective strategies to diminish the risk of the unknown. Project teams should make black swans part of every risk-management consideration. Two sidebars--one on big risks, and one on black swans--as well as a tip on black swans, accompany this article.
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