Performance Risk

Performance Risk

Performance Risk Jonathan Poland

Performance risk refers to the potential negative consequences that a business may face if a product, service, program, or project fails to deliver the expected value. This can include financial losses, damage to reputation, and operational disruptions. Performance risk can arise in a variety of contexts, including internal projects, outsourced projects, and purchases of products or services. The following are illustrative examples.

Product Value

A human resources software package claims it will reduce HR overhead by 30% with automation and streamlined business practices. The human resources team considering a purchase identifies the risk that the product will have data, integration, usability and process mismatch issues that may increase overhead costs as opposed to reducing them.

Service Value

A fashion company plans to outsource customer service to a partner. Business units identify the risk that customer satisfaction will fall below target levels.

Product Failure

The probability that a product will completely fail such that it has no value whatsoever. For example, the probability that a program to develop a custom tool for issuing government paychecks will completely fail such that paychecks can’t be issued.

Requirements Shortfall

The probability that a purchase, service or project will fail to meet a requirement that it has committed to meet. Any in-scope requirement can be listed as a risk if there is any probability that it will not be met. For example, a requirement that an office redesign project reduce noise in core working areas could identify a risk that noise would remain the same or increase after the redesign.

Benefit Shortfall

Any business benefits stated in the business case for a purchase or project are risks if there is any significant probability they will not be met. For example, if a business case for the purchase of an industrial robot states that it will increase the throughput of a production line by 8% there is a typically a risk that this benefit won’t be achieved due to unanticipated problems with the product or its integration with your environment, processes and systems.

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Key Bridge

People. Profit. Progress.

Business is the lifeblood of progress and you are the driving force regardless of where you fit in the value chain. People drive profit by bringing useful products and services to market. Profit drives progress by allowing the best ideas to emerge and the best investments to win.

This is the cycle of capital that moves the world forward and that’s why I started Key Bridge, a private membership for the pursuit of profit and progress; a platform for building better assets, tackling global challenges, and advancing the greater good.

Key Bridge

People. Profit. Progress.

Business is the lifeblood of progress and you are the driving force regardless of where you fit in the value chain. People drive profit by bringing useful products and services to market. Profit drives progress by allowing the best ideas to emerge and the best investments to win.

This is the cycle of capital that moves the world forward and that’s why I started Key Bridge, a private membership for the pursuit of profit and progress; a platform for building better assets, tackling global challenges, and advancing the greater good.