PMP Style Risk Management is Designed to Prevent Problems like the SVB Collapse
People who can pass the Project Management Professional (PMP)® exam are able to do so because they possess systems thinking capability. We realized this over two decades ago at Cheetah Learning which is why we teach Cheetah students how to master systems thinking in four days to be able to logically deduce the correct answers on the actual PMP exam the day after their class ends (most people spend up to two years preparing for this difficult exam and the majority still fail it because they don’t grasp systems thinking).
The reason why systems thinking is critical for project success is that it highlights project viability. Projects often fail for some very common errors in the systems dynamic – which someone who is able to pass the PMP exam can pinpoint with laser focus in the early project planning stages.
So let’s dive into the systemic influences that created the collapse of the SVB bank. There were two driving forces that created the third issue ultimately causing the bank’s demise. In PMP parlance – we would do a qualitative risk analysis in the early project stages to get familiar with the first two factors and understand how it could create the third event.
Here are the three dynamics:
- High-Risk Appetite – The first dynamic is obvious – as it’s Silicon Valley. As a Research Scientist for a large multinational corporation based on the East Coast, I lead a task force to study if we should have a research satellite office in Palo Alto. After being on the ground for just a couple days, I realized how different Silicon Valley was from the “Yankee Valley” – even just the idea of a task force to study this didn’t jive with the high-risk appetite of the “Ready, Fire, Aim” environment.
- Low Diversity – In any low diversity environment, groupthink drives herd mentality (perfect to create a run on a bank). Like attracts like and the venture capitalists in SV statistically fund other white males from elite universities.
- Simplistic Risk Mitigation – Having the first two dynamics are textbook blinders to anything other than the most trivial risk mitigation solutions as it’s far less likely diverse insights will carry any value.
So we have a bank (SVB) that caters to the “all from the same club” clientele, who then talk other low diversity, high-risk appetite folks (elected representatives) into relaxing regulatory oversight so they can skate by on a single strategy for protecting assets under their management.
As a PMP, I did a Qualitative Risk Analysis for my banking relationship with SVB (and kept my balance low in that bank). Here is the result:
| Aspect/Risk Event | Probability of Problem Happening For Bank | Impact to Bank if Problems Happen | Countermeasure for Bank |
| High-Risk Appetite Clients | High | High | Have policies in place to manage clients’ natural risk appetite tendencies |
| Low Diversity of Deposits | High | High | Seek a diverse set of bank customers |
| Single Strategy Asset Protection | High | High | Increase the type of asset protection strategies from a diverse set of input. |
In PMP land, what I just did was a lessons-learned summary of the reasons this “project” failed. Granted, hindsight is 20/20 but by doing a lessons-learned summary, future projects can benefit.
Michelle LaBrosse, PMP
Chief Cheetah, Cheetah Learning
“The first thing my boss said when I told him I was interested in getting my PMP certification was that if I was going to do it, he’d heard Cheetah Learning was the best.”