Risk Management Response Plan
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- Identify the four negative and positive risk response plans, and give an example of each. You must indicate in your answer what makes the risk positive or negative.
Negative risk refers to those activities that lead to undesirable consequences in a given project. Some of the strategies to deal with such risk include; avoid, mitigate, accept, and transfer the risk (Usmani, & Liang, 2017). Avoiding the risk means eliminating the impact of the risk on the project. For instance, one can move outdoor activities to a later date to avoid the effects of anticipated rain. Mitigating the risk means to reduce the probability of the risk happening or minimizing its impact. An example of risk mitigation would be to find a replacement for an employee who leaves the team at the peak of the project, to reduce the impact of this loss. The strategy of transferring demands that the risk is moved to a third party to manage its impact. For instance, one might contract a third party to complete a certain task that is beyond their expertise; in this way, the risk is transferred to this contracted party. Finally, as a strategy, acceptance refers to acknowledging the risk exists and that there is to done to manage it. For instance, if the prices of material rise, there is a risk that the project budget might be depleted.
On the other hand, the positive risk is the kind of risk that has a positive impact towards the project goals. The response plan for positive risk include; Enhance, Accept, Exploit, and share (Warsi, & Bahl, 2017). Similar to the negative risk, acceptance here refers to doing nothing towards managing the risk but noting it down. Enhance strategy demands that one increases the chances of a risk occurring so that the benefits of this positive risk may be realized. For instance, one can minimize the timeline of a project by completing it early to take up a new one. To exploit means to ensure that the opportunity brought by the risk is achieved. For instance, if there is a reward for completing a project before the set timeline, one can employ all techniques possible to ensure that this happens. The shared strategy works in that; one collaborates with another party to make sure that the opportunity is realized. Usually, the shared approach is used where the opportunity cannot be recognized individually. For example, if due to some reason one is unable to apply for a contract and another party can, the two can partner to realize this opportunity.
- What is the purpose of the risk management plan, and how does this plan help in managing project risks?
A risk management plan is a written document that formally details how to deal with particular risk within the project to help minimize the effect of such danger in case it happens. The plan details specific actions that relevant parties may consider to help identify, access, and the threats to the given project. Often, the risk management plan comes as a subsidiary of the main project management plan and specifically concerned about managing the risk within and without the project (Blyth, 2012). A risk management plan can be understood as a response plan for the project owners specifying how to act, once the risk occurs.
Regarding risk management, the plan is important to the management team as it helps in risk identification, analysis, response and control (Blyth, 2012). In this way, the plan contributes to managing potential threats that make it difficult to achieve project objectives and how to exploit the opportunities for better project performance. To make it more effective, the risk management plan includes specific roles and responsibilities team members assume towards handling the threats. Also, the plan also details the responses to be employed once the anticipated threats occur as well as the opportunities. The risk management plan is a course of action for the better management of project threats and exploitation of its opportunities.
Blyth, M. (2012). Business continuity management (1st ed.). Hoboken, N.J.: J. Wiley & Sons.
Usmani, F. & Liang, J. (2017). Risk Response Strategies for Negative Risks or Threats. PM Study Circle - A PMP Exam Preparation Blog. Retrieved 7 January 2017, from https://pmstudycircle.com/2015/04/risk-response-strategies-for-negative-risks-or-threats/
Warsi, S. & Bahl, R. (2017). Risk Response Strategies for Positive Risks or Opportunities. PM Study Circle - A PMP Exam Preparation Blog. Retrieved 7 January 2017, from https://pmstudycircle.com/2015/05/risk-response-strategies-for-positive-risks-or-opportunities/
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