Concise online soft exam knowledge points sorting-project risk coping strategies

    A project risk is an uncertain event or condition that, when it occurs, will positively or negatively affect one or more project objectives, such as scope, schedule, cost, and quality. Risk management includes the processes of planning risk management, identifying risks, performing risk analysis, planning risk responses, and controlling risks. The goal of project risk management is to increase the probability and impact of positive events in the project and reduce the impact and probability of negative events in the project.
    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
    Generally, the three strategies of avoidance, transfer, and mitigation are used to deal with threats or risks that may have a negative impact on project objectives. 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. These four strategies are discussed further below:
    (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. The most extreme circumvention strategy is to shut down the entire project. Some risks that arise early in a project can be avoided by clarifying requirements, obtaining information, improving communication, or acquiring proprietary skills.
    (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. A variety of instruments can be used to transfer risk, including (but not limited to) insurance, performance bonds, letters of guarantee and bonds. Certain specific risks can be transferred to another party using a contract or agreement. For example, if the buyer has a certain capability that the seller does not, it may be prudent to transfer part of the work and its risks to the buyer through contractual provisions. In many cases, cost reimbursement contracts may transfer cost risk to the buyer, while lump-sum contracts may transfer risk to the seller.
    (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. Examples of mitigations include adopting less complex processes, conducting more testing, or using more reliable suppliers. It may require developing prototypes to reduce the risk of scaling up from a bench model to an actual process or product. If the risk probability cannot be reduced, it may be possible to take mitigation measures against the risk impact, starting with the correlation points that determine the severity of the risk. For example, adding redundant components to a system can mitigate the effects of a primary component failure.
    (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. However, periodic reviews are required to ensure that the threat has not changed too much. The most common proactive acceptance strategy is to build a contingency reserve, arranging a certain amount of time, money, or resources to deal with risks.
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