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Monday, 08 December 2008 16:30

Collaborative T&T to Build the Project Risk Plan – Risk Response Identification Process (5 of 6)

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The Risk Response Identification Process is completed, during the facilitated meeting, typically on all High and Medium scoring risks. Risks with a Low risk score are generally treated as risks to be watched, and may not have a response identified. As the project progresses, risks on the Watch List may have their risk scores increase, due to changing circumstances on the project, requiring responses to be identified.  The effectiveness of the risk responses can influence the risk exposure. Responses to risk may result in eliminating a cause, which in turn, could eliminate multiple risks. The information contained, in the risk responses, also provides information for adjusting project schedules and budgets, as needed, for contingency.

 

Many project teams believe there is only one risk response – Mitigation; and define all of their responses as such. This approach is limiting and can create more exposure. Risks, and the nature of each response, can be addressed in one of four ways depending on whether the risk is a Threat or an Opportunity.

•    Avoid (Threat) / Exploit (Opportunity)
    •    Remove the cause of the risk by executing the project in a different manner
    •    Exploit the likelihood of the risk occurring by removing the uncertainty to ensure the opportunity happens
•    Transfer (Threat) / Share (Opportunity)
    •    Shift responsibility of risk ownership to more appropriate organization / entity to better manage the threat (e.g., contracts with 3rd parties, insurance, etc.)
    •    Share the opportunity with another organization / entity best suited to ensure the opportunity happens (e.g., contract or partnering with 3rd parties, etc.)
•    Mitigate (Threat) / Enhance (Opportunity)
    •    Preventive actions to reduce the likelihood of a risk occurring or making the impact less severe
    •    Enhancement to maximize the benefit of the opportunity to the project
•    Acceptance (Threat or Opportunity)
    •    Passive Acceptance incorporates the residual risk impact into the baseline of the project
    •    Active Acceptance involves developing a contingency plan

Contingency plans are actions to be taken when the risk occurs (e.g., disaster recovery / business continuity plans). They are used when the responses to the risk produce unintended effects on the risk exposure and help minimize the adverse impact of the risk. Defining a contingency plan is not enough on its own. For a contingency plan to be valuable to the project team, it must also be planned, funded and resourced – ready to execute in the event it is needed. 

During the facilitated meeting, the participants review each High and Medium scoring risks to document the type of response and a clear brief description of the response action. If needed, a contingency is also documented. The final step includes assigning project team / stakeholder responsibility for executing the risk response and / or contingency.
 


exhibit_5_risk_response_identification_example.png

Exhibit 5: Risk Response Identification Example


Collaborative Tools and Techniques to Build the Project Risk Plan – Overview (1 of 6)

Collaborative Tools and Techniques to Build the Project Risk Plan – The Risk Mgt Process (2 of 6)

Collaborative Tools and Techniques to Build the Project Risk Plan – Risk Ident. Process (3 of 6)

Collaborative Tools and Techniques to Build the Project Risk Plan - Risk Assessment Process (4 of 6)

Collaborative T&T to Build the Project Risk Plan – Risk Response Identification Process (5 of 6)

Collaborative T&T to Build the Project Risk Plan – Risk Monitoring and Review Process (6 of 6)



References

Project Management Institute. (2004) A guide to the project management body of knowledge (PMBOK) (2004 ed.).  Newtown Square, PA: Project Management Institute.

Hillson, David. (2004) Effective Opportunity Management for Projects – Exploiting Positive Risk, New York, NY: Marcel Dekker Inc.

For more information on methods to close the gap on your projects between project management theory and practical tools and techniques to apply this theory, contact Solutions Cube Group at http://SolutionsCubeGroup.com
Read 13581 times Last modified on Monday, 07 December 2009 05:11
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