Risk Response Strategy

Plan Risk Response – the process of developing options and actions to enhance or exploit opportunities and to reduce or eliminate threats to project objectives. 

Risk Response planning must be appropriate to: Severity of the risk,Cost in meeting the challenge,Timely to be successful, Realistic, Agreed by all parties,Owned by responsible person.

 Strategies for Negative Risks and Threads:

1. Avoid (Avoidance):  The focus of this strategy is to eliminate the cause of the risks. Taking the action to ensure the risk does not occur. This often accomplished by removing people and/or activities.
2. Transfer (Transference): This responses transfers accountability and responsibility of a risk to a third party. The third party actually performs the work or takes accountability. There is normally a cost incurred when using the transfer or transference response. A prime example of transference is the purchase of insurance
3. Mitigate (Mitigation): This response take actions to reduce the probability of risk occurring, or the impact of risk if it occurs. This could be thought of as developing a Plan B. An example is training. We try to reduce the probability and impact of employees performing poorly on the job training them.
4. Accept (Acceptance). This response entails taking no immediate action until the risk occurs. There are two types of acceptance strategies listed below. One is passive and the other is active.

• Acceptance is a response strategy appropriate for BOTH negative and positive risks
• A contingency Plan or Fallback Plan may be developed for a risk you plan to accept. However, the response will not be initiated until the risk occurs
• Acceptance is often the only choice when risks are generated from external sources, or when risk responses are beyond the control of the Project Manager
• Passive Acceptance: This type of acceptance occurs when no Contingency Plans are created to address the risk.
• Active Acceptance: Develop Contingency Plans to address the risk when it occurs. Active Acceptance is a solid option when necessary to convince risk averse stakeholders that a response plan for accepted risks is in place

Strategies for Positive Risks and Opportunities:

1. Exploit (Exploitation): This is a response that takes action to make a cause occur. Steps are taken to ensure the risk happens. It may require additional time or resources to use the exploit response method. This is the opposite of the avoid response.
2. Share (Sharing): This response enlist the support of a third party to take advantage of the opportunities presented by a positive risk event. Partnering with a third party allows both parties to share in the benefits. This is the opposite of the transfer response. Teaming agreements are an example of a share response.
3. Enhance (Enhancing): This response aims to increase the probability of the risk occurring or the impact of a risk if it occurs. Incentives are a common example of an enhance response. This is the opposite of the mitigate response
4. Accept (Acceptance): Acceptance is a feasible risk response for both negative and positive risks.

 References:

1. Project Management Institute. "Project Management Body of Knowledge (PMBOK), fourth edition, 2008".
2. Daniel C. Yeomans, PMI-RMP, PMI-PMP, CMQ/QE. "Passing the Risk Management Professional (PMI-RMP) Certification Exam, The First Try"".