5 Risk Strategies for Threats

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Project risks are ever present. Some risks become threats which could potentially derail your project. When you and the project team identify threats, you need the appropriate strategies to address threats. Here are the 5 risk strategies for threats. These strategies will prevent risks from derailing your project.

 

Escalate

You escalate risks when the threat is outside the project’s scope. You escalate the risk to the appropriate manager or department. As procedure, you still write the risk down in the risk register but you no longer monitor it.

An example of risk escalation occurs when the project’s communication system interferes with the accounting department. You escalate that risk to the accounting department.

Avoid

With avoidance, you either change the direction or remove something completely. The goal is to reduce the risk probability to zero (Remember, the definition of risk is an event that is uncertain with the probability of occurrence). Avoid the risk eliminates the probability to zero.

An example of this is you and your team avoiding certain suppliers and resources in order to reduce or eliminate project threats.

Transfer

Transfer is mostly used for insurance. It is also used with bonds and warrants. You are transferring project risk to another party.

If you have an oil rig project in the Gulf of Mexico, you will purchase hurricane insurance to protect you from any damage during hurricane season.

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Mitigate

Mitigating risk means that you take action to reduce the probability of occurrence and/or impact of a threat. With this risk strategy, you build a prototype (model, demo, etc.) as a test.

On agile projects, you would do a live software demo presentation to management to see how the software performs. Another example is confining your software rollout to one department to work out the kinks.

Accept

There are two types of risk acceptance: passive and active. Passive risk acceptance is mostly used for low risks. You periodically (daily, weekly, biweekly, etc.) review these low risks to make sure that they don’t become bigger risks. You and your team determine what frequency you review these risks  (daily, weekly, biweekly) in the risk management plan.

You create a contingency reserve for active risk acceptance. With a contingency reserve, the project manager sets aside a portion of the budget towards affording time, people and resources for known risks. The contingency reserve is also part of the cost baseline since the project manager controls it.

An example of passive risk acceptance is daily monitoring of a country’s election process where your plant. An example of active risk acceptance is allocating 10% of the budget for the contingency reserve just in case the know low-risk threats become bigger threats.

As a project manager, it is crucial to know all of the risk strategies at your disposal just in case threats arise. The five risk strategies of escalation, avoidance, transference, mitigation and acceptance will help you craft risk strategies to increase project success.

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2 Responses

  1. I think it is great that you are making it clear to people what the definitions (and steps) are for each of these important things.

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