To finish your project with minimal obstruction, you must manage risks proactively. Therefore, identifying risks at the beginning of the project execution and developing strategies to address them are crucial during project execution. So, how to select a risk response strategy and implement them in your project management plan? In this article at Project Management Basics, Dmitriy Nizhebetskiy shares the risk management strategies for both threats and opportunities.
Risk Response Strategies
For an effective risk management plan, you will have to manage both types of risks—positive and negative. A negative risk can impact your project adversely, so you will want to avoid it or decrease its impact on the project’s success. Here are some risk response strategies that you must know.
You avoid the risk by changing the scope, planning, or schedule. Often, organizations utilize this option if the risk is likely to impact employee safety, violate the law, or poses a threat to the company’s existence. However, this option is not always practical. According to a study conducted by McKinsey and Company, organizations that rely on risk avoidance options too much “…can actually squander reasonable opportunities to grow and achieve enterprise objectives.”
Here, you minimize the probability of the risk occurring or its impact. Remember, a risk mitigation strategy only reduces the likelihood or the impact of the risk. After developing a response, you must analyze and record it in the risk register for future monitoring.
When you transfer the risks, you do not eliminate or reduce risks but rather delegate or transfer them to a third party. How? Here are a few ideas:
Outsource the difficult work to a more experienced freelancer or organizations.Remove warranties and guarantees.Purchase insurance.
The goal of risk transfer is to ultimately reduce the negative impact of risks on the project.
This risk response strategy is used when you lack the authority to manage the risk. For instance, you are a project manager and dealing with an issue beyond your capability. Well, you do not have the power to implement a solution. Under such circumstances, you must approach the management to address the risk. Once they agree to manage the risk, limit yourself to monitoring it.
To read the original article, click on https://pmbasics101.com/really-best-risk-response-strategy/#transfer.