Analysing
Risk States

To select the optimal risk strategy, the De-Risk Matrix methodology recommends analyzing the risk states of all goals before starting strategic work. We will explain how to perform these analyses both individually and collectively and examine how goals' risk states change over time for continuous improvement. Typically, goal owners conduct these analyses in workshops, with input from risk and action owners, and analysts contribute their expertise.

These individual risk state analyses allow the organization or project to draw broader conclusions through pattern analysis. This pattern reveals the ambition level maintained over time and helps determine if the degree of risk taken is acceptable, needs to be reduced, or should be increased.

For example, an analysis may show that a company has maintained the same pattern for an extended period without adjusting its ambition level, indicating a need for new challenges. Innovative measures and new perspectives in leadership and culture may be beneficial.

Conversely, if there is no clear pattern and risk states are scattered, this suggests a fragmented reality or even chaos.

  • Dire

    Should We Lower Our Ambitions Immediately?

    In this risk state, the goal indicates that risk exposure greatly exceeds risk capacity. The forecast strongly suggests that the goal will fall below the target range threshold. Given this, it is advisable to reassess and potentially lower the level of ambition, especially if the threats driving the negative forecast are unmanageable.

  • Pessimistic

    Intervene to Explore How We Can Improve!

    In this risk state, the goal indicates that risk exposure exceeds risk capacity. The forecast suggests that performance will fall below the target threshold, and the supporting evidence is weak. To address this, it's crucial to establish sufficient risk capacity and strengthen the evidence. It’s easy to become pessimistic in this situation, so a realistic plan to build the necessary capacity is essential. Take the time to investigate the factors causing the negative forecast and identify potential opportunities within these risks.

  • Optimistic

    Let's Validate Our Ambitious Goals!

    In this risk state, the goal suggests that risk capacity is slightly lower than risk exposure, indicating some uncertainty about the evidence supporting the forecast. Despite this, the forecast suggests goal achievement is likely, and the business or project remains optimistic. Effort is needed to build sufficient risk capacity. To move towards stronger evidence, it's crucial to gather and bolster evidence. Simultaneously, balance resources between managing threats and seizing opportunities, and prioritize these efforts effectively.

  • Potent

    Potent

    Let's Explore Raising Our Ambition!

    Setting a goal in this risk state means our risk exposure is below our risk capacity. The forecast suggests the goal will exceed the target value, though the evidence is still weak. Here, the business or project is proactive, aiming to elevate ambitions over time. Achieving and surpassing the target value will require effort, leveraging measures that have shown positive results in the forecast. Maintaining the allocated risk capacity is essential. To build confidence in exceeding the current target value, gather relevant data through scenario planning, strategic development, business modeling, brainstorming, user testing, and similar activities.

  • Defensive

    Should We Raise Our Ambition?

    In this risk state, risk capacity exceeds risk exposure, and strong evidence suggests the goal will surpass its target. This indicates maturity, justifying an increase in ambition. Being in a defensive risk state implies caution in setting higher goals, but the opportunity to raise ambition within mature parameters should be seized.

  • Harmonious

    Shall we ensure goal achievement?

    A goal in this risk state indicates a well-balanced relationship between risk capacity and risk exposure. The forecast strongly supports that the goal will be achieved within the target range. In this scenario, the business or project can secure goal attainment by managing identified risks, or they can leverage this stable situation to explore new opportunities and potentially elevate their ambitions over time.

Pattern analysis for risk states

What Does It Mean if Most Goals Share the Same Risk State?

Pattern analysis helps to understand the overall risk states of goals within a business or project. It reveals whether the cumulative risk taken is acceptable and provides insights into whether the business or project is risk-averse, optimistic, or unrealistic. This helps in devising an optimal risk strategy and concrete measures to address the identified pattern.

Leadership teams can use this method to analyze the risk states of goals, understanding the culture of goal-setting and risk management and how it influences actions. Leaders often have strong ambitions that may overshadow analysis and evidence. For instance, if the pattern shows weak evidence, leaders might realize their assumptions about the culture were incorrect, necessitating a closer examination of goals and findings. Lack of solid evidence and timely improvements may lead to project delays. Learning from these experiences can build a better risk culture based on solid evidence.

Businesses or projects can identify patterns by examining how goal risk states are distributed and how these patterns have evolved over time:

  • Most goals are in one or more specific risk states.

  • Most goals are distributed in the same vertical or horizontal axis.

  • Goal risk states are evenly distributed without a recognizable pattern.

  • Most goal risk states have remained the same over an extended period.

For example, if most goals are in a "Failed" risk state, it indicates overly ambitious goals. Lack of patterns might indicate a fragmented reality or chaos. If the business or project has been in a "Safe" risk state for years without adjusting target or threshold values, it may be "stuck" and not innovating enough, needing a more aggressive risk strategy to progress.

Once the pattern is identified, it's important to reflect on its meaning and how to best manage it through an optimal risk strategy and specific actions. Goal owners should reflect on their goals' risk states individually and collectively, considering the organization's or project's culture and leadership style within the identified pattern. Reflective questions among goal owners help establish a deeper understanding of the goals' risk states. For example: Does the pattern show that the organization has preferred risk states aligned with the decided risk tolerance, ensuring optimal goal achievement across the company?

  • Dire

    Unrealistically High Ambitions

    If most goals fall into this category, it indicates that the ambition level is unrealistic, necessitating a re-evaluation of goals. Quickly recognizing this and learning from it is crucial for future success.

  • Pessimistic

    Chaotic and Consolidating

    If most goals are in this category, chaos and frustration are likely prevalent. The organization may be firefighting rather than making strategic decisions, with short-term measures overshadowing long-term goals. It's important to reinforce the organization’s position and avoid changing goals prematurely.

  • Optimistic

    Vulnerable and Hopeful

    If most goals are in this category, it means the evidence is weak, but optimism prevails. It's crucial to strengthen the weak evidence. The fine line between optimism and pessimism requires careful management and additional leadership support to avoid stagnation.

  • Potent

    Potent

    Challenging Ambition Levels

    If most goals are in this category, it means the organization or project has set high ambitions, perhaps too aggressively. Multiple parallel innovative efforts might threaten each other if risk capacity isn't well managed. Systematic risk management and critical consequence analysis are essential.

  • Defensive

    Ready for Higher Ambitions

    If most goals fall into this category, it means the ambition level can be increased. Staying too long in this risk state without raising ambitions can lead to complacency and stagnation. Be vigilant for overlooked threats if the organization has been in this state for most goals.

  • Harmonious

    Seeking Safety and Status Quo

    If most goals fall here, it means near-complete goal achievement, possibly signaling the project's end. For long-term businesses, remaining in this state without adjusting goals may indicate a lack of innovation. A homogeneous leadership team might be overly cautious, leading to missed opportunities for innovation.