Risk Response Planning: Strategies & Tools

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  • 0:04 Risk Management Process
  • 0:48 Strategies for Threats
  • 2:23 Strategies for Opportunities
  • 4:01 Lesson Summary
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Lesson Transcript
Instructor: Olga Bugajenko

Olga is a registered PRINCE2 Practitioner and has a master's degree in project management.

Risks are inevitable in any project, so as a project manager, you need to be prepared for their occurrence. In this lesson, we introduce four risk response strategies for negative risks and four risk response strategies for positive risks.

Risk Management Process

Projects are inevitably exposed to the environment in which they are implemented. This includes both the internal organizational environment and other projects undertaken by the organization, and the external environment, such as political and economic conditions in the country where the project is based. While as a project manager, you try to plan a project and control its activities as much as possible, unplanned events will still take place in the surrounding environment. These events might impact a project either positively or negatively. Such events are known as risks.

The risk management process usually includes four steps:

  1. Identifying possible risks
  2. Assessing their probability and impact on your project
  3. Planning a risk response for each risk
  4. Monitoring the project

Strategies for Threats

Let's take a second to imagine that you're planning to go on a vacation in Asia together with your best friend. Let's review some of the common risks that might take place and your possible responses to these.

There are four risk response strategies for negative risks, also known as threats:

  • Avoidance - avoiding a risk means reducing the probability of it happening to zero. Usually, this includes making some adjustments to the original project plan. For example, let's say that you're warned by your travel agent about an increased risk of malaria in Cambodia, so you decide not to go there at all and visit Vietnam instead.

  • Transferring - transferring a risk means shifting the responsibility for dealing with risk event consequences to someone else. For example, in case you're worried that your luggage will be lost during the flight, you can purchase travel insurance, so that in the event of the luggage actually being lost, the risk will be transferred to the insurance company, from whom you would receive compensation.

  • Mitigation - mitigating a risk means reducing the impact of a risk event on your project. For example, you might be planning to travel to the airport by train, but will also research alternative options in case there are planned rail works on the day of your travel.

  • Acceptance - accepting a risk means simply dealing with any of its consequences. For example, you know that your boss might not approve your vacation; however, you decide to purchase non-refundable plane tickets anyway because the price is too good. While this is the riskiest strategy out of four, it might be a wise choice if the probability of a risk is very low and the costs of mitigation are high.

Strategies for Opportunities

Not all unpredictable events will harm your project - in this case, your trip. Some might bring unexpected good news. However, because originally you're planning for the most likely scenario, you will still have to prepare a Plan B in case a positive risk materializes.

There are four risk response strategies for positive risks, also known as opportunities:

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