Question

C) Describe four planning scenarios to be prepared for identified risk . (8marks).

Answer 1

Let's look at what we can do for an identified risk:

• Avoid the Risk: The risks, let alone their magnitude, have to be eliminated it. Examples could be avoiding the activity, or just use a completely different approach. And therefore, this strategy is the most effective way of dealing with a risk.

• Reduce the risk: Another approach is to reduce the risk associated with it in case abandoning isn't a choice. Taking steps to ensure that negative outcomes are less likely to occur.

• Transfer the risk: Yeah, we would be dealing with insurance in the case of business. An insurance contract is basically a transfer of risk from one party to another, with a payment in return. So, organizations have the incentive to transfer risk in return for money if things go haywire.

• Accept the risk: the above 3 methods come at a cost and sometimes it's better to accept the risk and move forward with the business to unlock potential benefits. Spending money to avoid the risk with low impact is a resource wasted.

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