Priority 1

We're in a dire risk state and need to scale back our goals.

The warning signs are clear: Our goals are overly ambitious, and our best option might be to lower them - or can we find other options? A dire risk state is alarming, and it should drive immediate action. This is a critical moment. Is your organizational culture prepared to acknowledge the gravity of the situation without assigning blame?

• Your risk exposure surpasses your capacity to manage it.

• Continuing on the current path will likely lead to failure.

• It's advisable to reconsider your ambitions.

• Evidence strongly suggests the goal will fall short of its threshold

For example, if a company forecasts its liquidity goal and the evidence indicates it will not be met, it's in a dire risk state—continuing on the current trajectory spells failure. Strong evidence often clarifies why things are going wrong, which can guide corrective measures. These might include raising additional capital, which could dilute shareholder interests. The crucial question is whether stakeholders are willing to provide the necessary resources.

Priority 2

We're in a pessimistic risk state and need to intervene to steer towards a more positive outcome.

Questions are flying, but there's no real mystery: you need to intervene. Do we have a culture that encourages us to step back, rethink, and adopt an analytical approach to problem-solving?

• The forecast suggests the goal will likely fall short of its threshold, but the evidence isn't strong.

• Your risk exposure is slightly greater than your risk capacity.

• You need to intervene and find evidence wether the goal is realistic with the current risk capacity.

When a situation is viewed pessimistically, it means there's a concern or expectation of potential failure or problems. This negative outlook prompts the need for intervention. Intervention involves taking proactive steps to address the identified threats and prevent negative outcomes. For example, if a project manager pessimistically anticipates delays in a project, they might intervene by reallocating resources and adjusting timelines. In essence, a pessimistic perspective highlights the need for intervention to steer towards a more positive outcome.

The main distinction between a dire and a pessimistic risk state is that in the former, you have a clearer understanding of what needs to be corrected, though it might be unclear if addressing risk capacity is possible. In a dire risk state, the most reliable approach is to lower ambition to reduce risk exposure. In a pessimistic risk state you need to intervene, and you need to delve deeper into the underlying threats that are causing the goal to likely fall short of its threshold. After this investigation, you can determine the most appropriate actions and hope they're feasible.

Priority 3

We are in an optimistic risk state, needing to validate our sense of harmony.

The range of possible outcomes is broad, and uncertainty is palpable. Although there's optimism about achieving the goal, things could swing in any direction. To strengthen our position, we need to gather as much evidence as possible and keep the forecasts updated. Can we eventually achieve harmony? Does our organizational culture support leadership through uncertainty?

• The current forecast suggests that the goal might be met, but the evidence supporting this is weak.

• Your risk capacity is slightly lower than your risk exposure, indicating that more evidence is needed to determine if the current ambition level is realistic.

For example, if a project forecasts its future operational safety goal, the projection might indicate a likely success, but with weak evidence. This level of uncertainty requires the team to further explore the identified threats and opportunities. To reach a more harmonious state, we need to better understand these risks and determine effective ways to address them.

The main distinction between a harmonious and an optimistic risk state is that in a harmonious state, you generally know what needs to be monitored and adjusted, with a clear sense of whether risk mitigation steps are feasible. In an optimistic state, you need more time to understand the threats and opportunities, then decide on the best course of action, hoping it's achievable.

Priroity 4

We are in a potent risk state and need to explore the opportunities.

The rocket lands safely: This state indicates a potential goldmine that could raise your ambition level. However, this potential can vanish if you don't act quickly—like if a competitor seizes the opportunity first. You must determine whether your culture fosters innovation and encourages new ideas.

• The forecast suggests that the goal will be exceeded, but the supporting evidence is weak.

• Your risk capacity is slightly lower than your risk exposure.

• You need to explore whether to pursue the opportunity.

If a business identifies one or more opportunities related to a goal, it can impact the forecast. For instance, recruiting more women into a company might positively affect a diversity goal. If the opportunity hasn't been thoroughly explored, the forecast relies on weak evidence. This is the time to evaluate if the opportunity can help exceed the goal and, eventually, raise your ambition level.

The main distinction between a defensive and a potent risk state is that in the former, you know you need to increase your ambition but aren't sure by how much. In a potent risk state, you have a clearer sense of which opportunities to pursue and their potential benefits. The challenge is to confirm if these opportunities are truly as promising as you think, and if they can be executed. If the evidence is strong enough, you can move from a potent risk state to a more secure one.

Priority 5

We are in a defensive risk state and need to increase our ambition level.

Hit the snooze button: There's not much urgency because you're on track to meet your goal. You might be able to snooze once or twice, but don't get too comfortable. To avoid a culture of complacency, it's time to raise the ambition level before you fall asleep at the wheel. The organization needs to aim higher if it wants to win.

• The forecast shows strong evidence that the goal will be exceeded.

• Risk capacity is higher than risk exposure.

• The current path likely leads to success.

• The ambition level can likely be increased.

Imagine a company that forecasts its revenue target and finds strong evidence that it will exceed expectations. This suggests that the current ambition level may be too low, pointing to a defensive stance. There's room for more risk to strike a better balance between risk exposure and risk capacity.

Priority 6

We are in a harmonious risk state and need to secure goal achievement

The prize is almost yours: Congratulations—you've achieved harmony between ambition and capacity, with a high likelihood of reaching your goal. However, stay focused and don't get complacent. Does your organizational culture support maintaining focus until the end? Leadership needs to understand when it's truly safe to celebrate.

• The forecast indicates strong evidence that the goal will be achieved within the target range.

• Your risk capacity and risk exposure are balanced.

• You're likely to achieve your goal if you stay on track.

For example, if a project forecasts a safety goal with strong evidence that it's on track to meet the target, the team can be relatively confident. Similar projects in other locations have yielded comparable outcomes. However, it's still crucial to monitor identified threats and opportunities as you approach the goal's deadline.

The first step in assessing the risk state of goals is to identify risks and evaluate their probable and potential impacts. This process also involves gauging the level of evidence supporting these risk assessments. Unlike other risk evaluation methods, the De-Risk Matrix methodology focuses on finding the most likely impact a risk could have on one or more goals, emphasizing the need for solid evidence. Opportunities are considered as significant as threats because recognizing upside risks can pave the way for higher ambitions. The goal is to identify and prioritize risks that could affect multiple goals, integrating as many relevant risks as possible into the forecasting process.

The second step in assessing risk states involves creating forecasts for each goal within a designated timeframe. This process integrates the risks identified earlier to predict outcomes more accurately. As measures are implemented to improve the likelihood of achieving goals, these forecasts are updated to account for their anticipated effects, potentially altering the risk state of the goals. The tools used for forecasting can range from simple Excel spreadsheets to sophisticated AI-based systems, depending on the size and complexity of the organization or project. Larger organizations often have dedicated teams or forecast owners responsible for maintaining and updating these forecasts.

The third step in the De-Risk Matrix methodology, focuses on assessing the level of evidence supporting forecasts for goals. The degree of evidence provides an indication of the uncertainty in the underlying data. The step also emphasizes the need to evaluate all evidence sources and to potentially develop customized lists of evidence factors to suit specific organizational contexts. Additionally, it suggests that organizations can implement quantified approaches for evidence assessment, using weighted scoring systems.