Enterprise Opportunity and Risk

Abstract

In traditional systems engineering (TSE) environments, and particularly in recent years, many are concerned about risk management. So much so that risks are identified early and often, and mitigation techniques are aggressively pursued. In contrast one does not hear as much about opportunity management. What about enterprise systems engineering (ESE) environments? Do traditional methods of handling risk and opportunity carry over, or should we be concerned about potential changes in the way we view the problem? Assuming there are new perspectives to bring to bear on this topic, what are they, and what principles might be discovered and applied to the enterprise to better deal with opportunity and risk? This paper offers some answers to these questions: • There is duality in treating risks and opportunities. • In ESE, be aggressive with opportunity and accepting of risk. • The greatest enterprise risk may be in not pursuing enterprise opportunities. Introduction In a recent book on opportunity management [Hillson, 2004] Hillson makes a rather convincing case that opportunities get “short shrift” in most programs. See, for example, Hillson’s comments (on pp. iii, vii, and xvi): “There is ... a systemic weakness in risk management as undertaken on most projects. The standard risk process is limited to dealing only with uncertainties that might have negative impact (threats). This means that risk management as currently practiced is failing to address around half of the potential uncertainties—the ones with positive impact (opportunities).” Furthermore, anecdotally, the author of this paper has noticed that many—if not most—risk and risk management documents, tools, processes, and websites, etc. do not even mention or discuss opportunities or opportunity management. Therefore, it seems to make sense to “appreciate” opportunity at the system scale. Hillson views an “opportunity” as the opposite of a “threat” and adopts the position that these two factors together constitute risk. But, he also provides extensive evidence of the viewpoint that treats opportunity as the opposite of risk. In the present author’s opinion, the latter view is more traditional and straightforward; though Hillson makes the case that the former is becoming more prevalent in academic and professional circles. Nonetheless, in this theoretical paper, opportunity is viewed as the opposite of risk. The author hypothesizes that in systems engineering at an enterprise scale the focus should be on opportunity, and that enterprise risk should be viewed more as something that threatens the pursuit of enterprise opportunities, as depicted in Fig. 1. Fig. 1 is meant to suggest that the importance of opportunity management should increase qualitatively as one proceeds from system, to System of Systems (SoS), to enterprise scales. This is partially based on the premise, supported by historical fact and ad hoc observations, that risk