Risk response strategy is to analyze the identified risks qualitatively, quantitatively and risk ranking, and formulate corresponding response measures and overall strategies. Including: positive risk or opportunity coping strategy and negative risk or threat coping strategy.
(1) Coping Strategies for Positive Risks or Opportunities Of the
following four strategies, the first three are specifically designed for risks that have a potential positive impact on project objectives. The fourth strategy, acceptance, can be used to address both negative risks or threats and positive risks or opportunities. These strategies are discussed below, including developing, sharing, enhancing, and accepting.
(1.1) Pioneering. If an organization wants to ensure that opportunities are realized, this strategy can be used for risks that have a positive impact. This strategy aims to remove the uncertainty associated with a particular positive risk, ensuring that opportunities are certain to arise. Direct exploitation involves allocating the most capable resources in the organization to the project to shorten the time to completion, or, adopting new or improved technology to save costs and shorten the duration to achieve project objectives.
(1.2) Improve. This strategy is designed to increase the probability and/or positive impact of an opportunity. Identify the key factors that influence the occurrence of positive risks and maximize these factors to increase the probability that the opportunity will occur. Examples of improving opportunities include increasing resources for early completion of activities.
(1.3) SHARE. Sharing a positive risk means assigning some or all of the responsibility for responding to an opportunity to the third party best positioned to seize the opportunity in the project's interest. Examples of sharing include the establishment of risk-sharing partnerships and teams, and the formation of companies or joint ventures for special purposes in order to take advantage of opportunities to benefit all parties.
(1.14) Accept. Accepting opportunities means being willing to take advantage of opportunities when they arise, but not actively pursuing them.
(2) Coping strategies for negative risks or threats
Threats or risks that may negatively impact project objectives are typically addressed with avoidance, transfer, and mitigation strategies. The fourth strategy, acceptance, can be used to address both negative risks or threats and positive risks or opportunities. Each risk response strategy has a different and unique impact on the risk profile. Different strategies should be selected based on the probability of occurrence of the risk and the impact on the overall objectives of the project. Avoidance and mitigation strategies are generally appropriate for high-impact, serious risks, while transfer and acceptance are more appropriate for low-impact, less-severe threats.
(2.1) Avoidance. Risk aversion refers to the risk response strategy that the project team takes to eliminate threats, or to protect the project from risk. Usually includes changing the project management plan to completely eliminate the threat. Project managers can also isolate project objectives from the impact of risks, or change threatened objectives, such as extending schedules, changing strategies, or reducing scope.
(2.2) Transfer. Risk transfer refers to the risk response strategy of the project team to transfer the impact of the threat together with the response responsibility to a third party. Transferring risk is simply shifting the responsibility for risk management to another party, rather than eliminating it. Transferring is not passing risk to subsequent projects, or passing risk to others without their knowledge or consent. With a risk transfer strategy, there is almost always a risk fee to be paid to the risk taker. Risk transfer strategies are most effective in dealing with the financial consequences of risk.
(2.3) Mitigation. Risk mitigation refers to a risk response strategy in which the project team takes actions to reduce the probability or impact of a risk. It means reducing the probability and/or impact of adverse risks to within acceptable thresholds. It is often more effective to take early action to reduce the probability of a risk and/or possible impact on the project than to try to remedy the risk after it has occurred.
(2.4) Accept. Risk acceptance refers to the risk response strategy that the project team decides to accept the existence of the risk without taking any action (unless the risk actually occurs). This strategy is used when other methods are not possible, or when other methods are not economically efficient. This strategy indicates that the project team has decided not to change the project management plan to address a risk, or that no other reasonable response strategy could be found. The strategy can be passive or active. Accept the risk passively, just document the strategy without any other action; leave it to the project team to deal with the risk as it occurs.
The coping strategy for positive risks can be abbreviated as "opening, raising, and tapping", and the coping strategy for negative risks is abbreviated as "regulations and reductions." For more knowledge points and related exam questions over the years, please look for conciseness in the application treasure. If you are busy with projects and have thought about soft exams, you need conciseness!
(1) Coping Strategies for Positive Risks or Opportunities Of the
following four strategies, the first three are specifically designed for risks that have a potential positive impact on project objectives. The fourth strategy, acceptance, can be used to address both negative risks or threats and positive risks or opportunities. These strategies are discussed below, including developing, sharing, enhancing, and accepting.
(1.1) Pioneering. If an organization wants to ensure that opportunities are realized, this strategy can be used for risks that have a positive impact. This strategy aims to remove the uncertainty associated with a particular positive risk, ensuring that opportunities are certain to arise. Direct exploitation involves allocating the most capable resources in the organization to the project to shorten the time to completion, or, adopting new or improved technology to save costs and shorten the duration to achieve project objectives.
(1.2) Improve. This strategy is designed to increase the probability and/or positive impact of an opportunity. Identify the key factors that influence the occurrence of positive risks and maximize these factors to increase the probability that the opportunity will occur. Examples of improving opportunities include increasing resources for early completion of activities.
(1.3) SHARE. Sharing a positive risk means assigning some or all of the responsibility for responding to an opportunity to the third party best positioned to seize the opportunity in the project's interest. Examples of sharing include the establishment of risk-sharing partnerships and teams, and the formation of companies or joint ventures for special purposes in order to take advantage of opportunities to benefit all parties.
(1.14) Accept. Accepting opportunities means being willing to take advantage of opportunities when they arise, but not actively pursuing them.
(2) Coping strategies for negative risks or threats
Threats or risks that may negatively impact project objectives are typically addressed with avoidance, transfer, and mitigation strategies. The fourth strategy, acceptance, can be used to address both negative risks or threats and positive risks or opportunities. Each risk response strategy has a different and unique impact on the risk profile. Different strategies should be selected based on the probability of occurrence of the risk and the impact on the overall objectives of the project. Avoidance and mitigation strategies are generally appropriate for high-impact, serious risks, while transfer and acceptance are more appropriate for low-impact, less-severe threats.
(2.1) Avoidance. Risk aversion refers to the risk response strategy that the project team takes to eliminate threats, or to protect the project from risk. Usually includes changing the project management plan to completely eliminate the threat. Project managers can also isolate project objectives from the impact of risks, or change threatened objectives, such as extending schedules, changing strategies, or reducing scope.
(2.2) Transfer. Risk transfer refers to the risk response strategy of the project team to transfer the impact of the threat together with the response responsibility to a third party. Transferring risk is simply shifting the responsibility for risk management to another party, rather than eliminating it. Transferring is not passing risk to subsequent projects, or passing risk to others without their knowledge or consent. With a risk transfer strategy, there is almost always a risk fee to be paid to the risk taker. Risk transfer strategies are most effective in dealing with the financial consequences of risk.
(2.3) Mitigation. Risk mitigation refers to a risk response strategy in which the project team takes actions to reduce the probability or impact of a risk. It means reducing the probability and/or impact of adverse risks to within acceptable thresholds. It is often more effective to take early action to reduce the probability of a risk and/or possible impact on the project than to try to remedy the risk after it has occurred.
(2.4) Accept. Risk acceptance refers to the risk response strategy that the project team decides to accept the existence of the risk without taking any action (unless the risk actually occurs). This strategy is used when other methods are not possible, or when other methods are not economically efficient. This strategy indicates that the project team has decided not to change the project management plan to address a risk, or that no other reasonable response strategy could be found. The strategy can be passive or active. Accept the risk passively, just document the strategy without any other action; leave it to the project team to deal with the risk as it occurs.
The coping strategy for positive risks can be abbreviated as "opening, raising, and tapping", and the coping strategy for negative risks is abbreviated as "regulations and reductions." For more knowledge points and related exam questions over the years, please look for conciseness in the application treasure. If you are busy with projects and have thought about soft exams, you need conciseness!