Introducing Project Risk Management - Planning for Risk Responses

18 important questions on Introducing Project Risk Management - Planning for Risk Responses

What are important considerations when planning for risk response?

  • The response to the identified risks must be in balance with the risk itself
  • The people or individuals assigned to the risk must have the authority to react to the risk.

What are the two inputs that are needed for appropriate risk response?

The risk management plan and the risk register

What is the key objective of risk response planning?

  • To bring the overall risk of the project down to an acceptable level.
  • Address any risks that have an unacceptably high score
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How does risk response creation work?

  1. Determine the category of risk response
  2. Develop the response
  3. Refine the response
  4. Document the response
  5. Make the response ready for use

How can a negative risk or threat be avoided?

  • By changing the project plan to eliminate the risk
  • Clarification to avoid discrepancies
  • Hiring additional resources to deal with technology in the project
  • Use proven technologies rather than new approaches

What does transferring of risks mean?

It means that the risk is transferred to a third party, often with a related premium to pay for the 3rd party to own and manage the risk (e.g insurance, performance bonds, warrantees, guarantees, fixed price contracts)

What does mitigation of risks mean?

It means to put effort in to reduce the probability and/ or impact of an identified risk in the project. The costs and time invested to reduce or eliminate the risk is more cost effective than repairing the damage caused by the risk.

What are examples of mitigation of project risks?

  • Adding activities to the project to reduce the risk probability or impact
  • Simplifying the processes within the project
  • Completing more tests on the project work before implementation
  • Developing prototypes, simulations, and limited releases.

What are means of dealing with positive risks and opportunities?

  • Exploiting the positive risk or opportunity - to ensure that the risk does happen in order to realize the positive impact of the risk event
  • Sharing the positive risk - sharing the risk ownership and transferring it to the organization that can capitalize most on the risk opportunity
  • Enhancing of the positive risk - an attempt to modify the risk probability and / or impacts on the project in order to realize the most gains from the identified risk.

What do we mean with risk acceptance? And what is passive acceptance, and active acceptance?

It is the process of simply accepting the risks because no other action is feasible. We recognize both passive acceptance, where the project deals with the risks as they happen, and active acceptance, where a contingency plan is developed for if the risk occurs.

What do we mean with a contingency plan? And a fallback plan?

A contingency plan is a predefined set of actions the project team will take should certain events occur.
A fallback plan is a reaction to risk that has occurred when the primary response proves to be inadequate. 

What is a contingency allowance?

The amount of money the project will likely need in the contingency reserve based on the impact, probability, and expected monetary value of a risk event.

What should happen as a result of risk response planning?

The risk register should be updated with the risk responses which guide the reaction to each identified risk.

What do we mean with residual risks?

Any risks that remain after risk response planning. These are often minor and have been acknowledged and accepted.

What do we mean with a secondary risk?

A risk that is a consequence of risk response. These must be identified, analyzed and planned for, just like normal risks.

When is it needed to create contracts for risk response?

When multiple entities are involved in a project, a contractual agreement might be necessary to identify the responsible parties for the identified risks. This is mostly the case with transference of risks to 3rd parties.

What do we mean with justification of risk reduction?

That the process and logic behind the strategies to reduce the risk should be evaluated to determine whether the solution is worth the tradeoffs.

What is a final activity that needs to take place as a consequence of risk response planning?

To update the project plan.

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