9.5 Plan Risk Responses - 9.5 Plan Risk Responses
Plan Risk Responses is a critical process in Project Risk Management that involves developing strategies to address both threats and opportunities identified during the risk identification and analysis phases. This process ensures that the project team is prepared to handle uncertainties and maximize the likelihood of project success.
Key Concepts
1. Risk Response Strategies for Threats
Risk Response Strategies for Threats are actions taken to minimize the impact or likelihood of negative risks. These strategies include:
- Avoid: Eliminating the risk by changing the project plan.
- Transfer: Shifting the impact of the risk to a third party.
- Mitigate: Reducing the impact or likelihood of the risk.
- Accept: Acknowledging the risk and deciding not to change the project plan.
Example: In a construction project, if a risk is identified that adverse weather conditions could delay the project, the response strategy might include avoiding the risk by scheduling critical tasks during the dry season, transferring the risk by purchasing weather insurance, mitigating the risk by implementing weatherproofing measures, or accepting the risk with a contingency plan.
2. Risk Response Strategies for Opportunities
Risk Response Strategies for Opportunities are actions taken to maximize the positive impact of identified opportunities. These strategies include:
- Exploit: Ensuring the opportunity is realized by changing the project plan.
- Share: Allocating the opportunity to a third party who can capitalize on it.
- Enhance: Increasing the likelihood or impact of the opportunity.
- Accept: Acknowledging the opportunity and deciding not to change the project plan.
Example: In a software development project, if an opportunity is identified that a new technology could significantly improve the product's performance, the response strategy might include exploiting the opportunity by integrating the new technology, sharing the opportunity with a partner who specializes in the technology, enhancing the opportunity by investing in research and development, or accepting the opportunity without changing the project plan.
3. Contingency Reserves
Contingency Reserves are resources set aside to handle the impact of identified risks. These reserves can be in the form of time, budget, or materials. They provide a buffer to absorb the effects of risks that materialize.
Example: For an engineering project, contingency reserves might include setting aside a budget for unexpected costs, reserving additional time in the project schedule for potential delays, or stocking extra materials to account for supply chain disruptions.
4. Fallback Plans
Fallback Plans are alternative courses of action to be implemented if the primary risk response strategy fails. These plans ensure that the project can continue even if the initial response is unsuccessful.
Example: In a project to build a new manufacturing facility, if the primary risk response strategy to mitigate supply chain delays fails, the fallback plan might include sourcing materials from a secondary supplier or adjusting the project schedule to accommodate the delay.
5. Risk Ownership
Risk Ownership involves assigning responsibility for each identified risk to a specific individual or team. This ensures that risks are monitored and managed throughout the project lifecycle.
Example: For a construction project, risk ownership might involve assigning the project manager to oversee risks related to budget overruns, the site manager to manage risks related to safety, and the procurement team to handle risks related to material supply.
Examples and Analogies
Think of planning risk responses as preparing for a journey. Just as you need to pack a first-aid kit, carry a map, and have a backup plan for unexpected detours, you need to develop strategies to handle both threats and opportunities in your project. Effective risk response planning ensures that you are prepared for any challenges and can seize opportunities to reach your destination successfully.
For instance, in an engineering project to design and build a new product, planning risk responses would involve identifying potential challenges, evaluating their impact, and developing strategies to address them. By continuously monitoring and adjusting these responses, the project team can ensure that the project stays on track and achieves its objectives.