Question

by using project of your choice discuss the strategies for responding to negative risks.

Answer 1

According to the Project Management Body of Knowledge, we have 5 different strategies to manage the different contextual negative risks:

• Escalate: Escalate response strategy is used when you are unable to process requests either because you do not have authority, or because of the scarcity of resources or want of knowledge. Escalation is done in order to make someone who has clear authority, command and proper resources to deal with the risk. You have brief your Project Manager Officer or management and upon their acceptance, you won't have to do anything except putting notes. For example; Your supplier is reluctant to provide quality material and poor quality is hurting your project, you are just communicating to your immediate manager for escalation.

• Mitigate:  Mitigate risk response strategy is used to decrease the impact or possibility of the risk.  you.  It is used to make the risk less powerful in its impact on the project. For example: Due to COVID 19 and the importance of social distancing and without shutting your project, you are exploring how to be aligned virtually via Online platforms like Zoom, Hangouts.

• Transfer: Transfer risk response strategy makes the shift of responsibility to some third party who was not the party in the beginning. Transfer of risk makes sure that a third party will cater to the risk in any eventuality. It does not eliminate the risk, it only shifts the responsibility from one party to another. For example; You are making an agreement with some health insurance companies that if any employee is deemed COVID positive, they will be providing health insurance and other benefits to that employee.

• Avoid: Avoid risk response strategy has always been the best risk response strategy but cannot always be used due to various constraints. It makes sure that the very risk is eliminated by switching the original project plan, changing the scope of the project, or its schedule. For Example; You will not be ordering cold drinks during the rainy season because people would be reluctant to purchase it, you just avoided the wastage risk.

• Accept: Accept risk response strategy takes no action to deal with the risk rather it only acknowledges the risk might happen and there is nothing you can do about it rather than being more adaptable to risks. It is considered the riskiest type of strategy and you select it when all other options are exhausted. It is ideal for that project where stakes are not that high. For example; Your supplier who enjoys monopoly is forcing you to either accept this defective lot or I will stop the production altogether, you are rational at accepting it.

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