1/19/2024 0 Comments Irad project management![]() ![]() If a manufacturer provides a part to help you meet new customer requirements, you may share the risk of internal costs so that you both benefit from increased sales. PMI defines sharing risk as the allocation of the “…ownership of an opportunity to a third party who is best able to capture the benefit for the project.” Tapping into a partner to share the risk is a strategy to increase the possibility that the positive risk occurs to everyone’s benefit. In these instances, the project manager may delay, avoid, or activate specific project activities to increase the probability of a risk occurring.įor instance, to exploit the positive risk (opportunity) of early delivery of a project deliverable, an incentive (free lunch) is offered to the team to work overtime. PMI defines the positive risk response of exploit as “…ensuring that an opportunity occurs”. If, for example, a potential customer asks for a one-time discount, the positive risk of gaining the business may be escalated to the company owner to decide if the sale is worth it. Risk elevation is used when a risk needs to be addressed by an authority beyond the project team. The risk can benefit the project, and the risk response should maximize that. Positive risk response strategies are focused on leveraging opportunities for your project. ![]() Risk Practice Questions PMP Risk Response Strategies: Positive In our external security camera example, the lack of a sprinkler system shows that they accept the risk of fire but do not accept the risk of theft. PMI defines accepting risk as “…not taking any action unless the risk occurs.” The company’s tolerance level for risk influences the use of the accept risk response. ![]() Negative risk response also includes acceptance. The residual risk is that a fire might destroy the building and its contents without internal warning systems. PMI defines mitigate risk as “…decreasing the probability of occurrence or impact of a threat.” As it is decreased, not removed, there can be residual risk.įor example, to mitigate theft, a company installs exterior security cameras. Mitigating risks means the risk is just slightly above your organization’s risk appetite or tolerance level, so you take steps to reduce the risk’s impact to within acceptable limits. Should the vendor fail to meet the requirements, the risk transfers back to the project company to address. When a company outsources customer service operations, for example, the risk of personnel recruitment expenses will transfer from the project company to the vendor. PMI defines transfer risk as “…shifting the impact of a threat to a third party.” The definition’s use of the word “threat” signals a negative risk. The most common risk response is transfer. PMI defines avoid risk as “…eliminating the threat or protecting the project from its impact.” Avoidance eliminates the risk altogether when there is no risk tolerance.įor instance, if the project’s computers have no internet access, you avoid malicious external software attacks and the risk of losing data. Avoid RiskĪvoiding risk means taking steps to keep a risk from happening. Escalation, such as notifying the shipping manager of the container damage, can help ensure a risk response is activated to help future projects. Escalate RiskĮscalate risk is used when a risk response authorization is needed from outside a project’s team.įor example, if a customized shipping container cracks after the project closes, the risk will be high for the next project requiring it. Project managers cannot fully control risk but can use specific risk response strategies to manage it. Increased costs, delayed deliverables, inferior quality, and regulatory fines are negative risk examples. PMI defines risk as “An uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project objectives.” Project Management Academy, a Premier PMI Authorized Training Partner (ATP), provides students with this list of risk response strategies: NegativeĪ project manager may use any combination of risk control techniques depending on the circumstances of the project risk. PMP Risk Mitigation Strategies: Negative and Positive The terms “risk mitigation PMP” and “mitigate risk PMP” refer to risk response strategies. Project Management Professional (PMP)® certification exam questions might include how to plan for risk, how to mitigate risk, and what risk control is. Project managers should know the risk responses used in risk management. What is Risk Mitigation PMP or Mitigate Risk PMP? ![]()
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