Strategies for Negative Risks or Threats and Strategies for Positive Risks or Opportunities

There are seven types of risk responses. They are Avoid, Transfer, Mitigate and Accept which are negative risks responses, Exploit, Share, Enhance and Accept which are positive risks responses. Accept is under both positive and negative.

Avoid is used when you don’t want to get into the situation. Example: avoiding the scope, extending the schedule, changing the strategies and even avoiding the project itself. This response is used when the risk ranking is high with high probability and high impact.

Transfer is shifting the risk to some other party. By transferring the risk means not disowning the risk. Still the project team owns the risk but usually transfer from the financial angle. For example Insurance, bonds, warranty, guarantee or even transferring some of the work/scope back to the customer. This response is used when the risk is at lower ranking.

Mitigation is reducing the probability and/or impact to the situation. For example providing the training to the staff when there is no expertise available, having the standby machines when the primary fails. This response is used when the risk ranking is high with high probability and high impact.

Accept is acknowledge the risk and don’t take any action till it materializes. There are two types of acceptance. One is passive and second is active acceptance. Passive acceptance is don’t do anything. When it happens then get into action. For example you know that machine is going to be down. When goes down then only you will try to get another one or repair it. Active acceptance is preparing for contingency reserve in terms of cost, schedule or resource. This response is used when the risk is at lower ranking.

Exploit is used to realizing the opportunities. For example early delivery to get more business, use latest technology to save cost. Here the team ensures that risk materializes and the response is in an aggressive manner.

Share is allocation of entire or partial risk to some other third parties to gain benefits. For example joint venture, partnership.

Enhance is increasing the possibility of occurrence of risk by increasing the probability and or impact. This is similar to Exploit but not in an aggressive way. For example, adding the resources to complete the project early.

Accept is taking the opportunity if it occurs, but not activity pursing it.

Strategies for Negative Risks or Threats and Strategies for Positive Risks or Opportunities techniques used under the process Plan Risk Responses.