Moving from Risk Management to Stress Testing of Projects [PMI]

As the complexity of project grows, Project Managers will face a daunting task of managing frequent crisis situations in the project life-cycle. This calls for an innovative approach for managing crisis beyond the traditional risk management framework. Stress testing is a robust methodology that bankers periodically use to analyze the impact of key risk scenarios, on the bank’s financial health, by simulating crisis situation. Project Managers in banks have evolved innovative techniques to do periodic stress testing leveraging new age technology e.g. Big Data. The learning can be adopted in large scale programs in other fields to effectively monitor project health, reduce project risks and handle project crisis situations proactively and more effectively. The paper discusses a framework for Project Managers to do periodic stress testing of large programs. The key points discussed are :

• How to define stress scenarios for the program

• How to conduct periodic stress testing

• How to analyze the stress testing results and take preventive measures

The paper draws from our experience in executing complex regulatory projects for large banks to manage crisis reporting and stress testing. While risk management is a standard project management practice, it’s more of a postmortem we do after a crisis has happened. Stress testing is the next evolutionary stage of risk management and the need of the hour. The framework discussed in the paper is easy to adopt, practice and will help decrease project risks in times of crisis, a key enabler to the success of Vision India.

Published in: Project Management Institute (PMI), National Conference, India, 2016