Bureaucratic Environments and Risk Management

Bureaucratic Environments and Risk Management

Risk management can be a challenge in bureaucratic environments.  The overall tendencies of bureaucratic environments effect project communications, which in turn affects the success of risk management.

Tendencies of Bureaucratic Environments

Set project management procedures and processes are essential to increase projects’ effectiveness.  However, there is a fear amongst project teams that creating standardized methods to perform project tasks will create a bureaucratic environment.  Bureaucratic companies tend to be resistant to change and are less receptive to the innovative processes that are associated with project management practices.  Projects are often slow to complete or are never completed.  This is because in bureaucratic environments there tends to be a lack of claimed responsibility that leads to difficulties in establishing proper communication flow.  Improper communication flow can lead to a plethora of issues particularly with risk management.

Communication and Risk Management

There are several topics that must be discussed by the project team at the onset of a project.  Risk management is always in the top five.  Successful risk management is contingent on establishing proper communication flow, which includes establishing points of responsibility.  Identifying risks and determining how to address them is critical in risk management.  Failure to claim project task responsibility can lead to inadequate risk assessments.  In addition, project sub-groups need to communicate risks honestly and in a timely manner to avoid thwarting the progress of projects.

Conclusion:  A Case Study

While in bureaucratic environments, responsibility and communication are common issues, they are correctable. In a recent case study of a small brokerage firm, the team members’ lack of project ownership and an inadequate communication flow were hindering project progress.  The negative effects of failed risk management caused the firm to examine the how project approvals were handled and to create a more effective communication flow.  The management team and the project team collaboratively developed a repeatable communication system that:

  • defined project responsibilities,
  • addressed approval processes, and
  • addressed how risks were communicated and managed.
While the bureaucratic layers were still present, the project team was given flexibility to exercise creativity in managing projects.  Old projects were finally completed or closed while new projects were being executed with less complexity and more enthusiasm from the project team.