Risk management is a proactive process which involves managing risks before they occur. In your project you will encounter two types of risks: negative risks and positive risks.
A negative risk could harm your project objective and a positive risk can have some positive impact on your project.
As a project manager you have to manage both types of risks. Since these risks are different, the strategy to manage them will also be different.
For positive risks you will try to increase the likelihood of the risks happening, and for negative risks, you will try to decrease the probability of the risks happening or their impact.
The following strategies can be used to manage negative risks:
And for positive risks, you can use any of the following strategies:
So you have seven types of strategies to manage the risks, and the accept risk response strategy is used by both types of risks.
You have four strategies to manage positive risks, and out of all these strategies the enhance risk response strategy and the exploit risk response strategy seem to be similar and are a common cause of confusion among professionals.
Therefore in today’s blog post we are going to discuss these risk response strategies, and I hope this blog post will help you understand them better.
Okay, let’s get started.
The enhance and the exploit risk response strategy look similar to many people, because in both cases your intention is to realize the opportunity; however, there is a difference in the way of implementing strategies. The enhance risk response strategy takes the situation leniently, while the exploit risk response strategy takes it aggressively.
Enhance Risk Response Strategy
Enhancing is about increasing the probability of the occurrence of positive risks. Here, you take measures to increase the chance of the event happening, but there will be no assurance of realizing this opportunity.
In the enhance risk response strategy, the opportunity may or may not be realized.
Suppose you’re constructing a school building, and suddenly the client comes and tells you that if you complete the job two months earlier than planned, he will give a monetary reward.
Therefore you take several measures to realize the opportunity. You fast-track (fast-tracking—multiple activities are performed in parallel or simultaneously to reduce the time to finish the project) many activities, and try to bring in some other resources from your organization (if they are available), etc.
As you can see in the above example, you’re only trying to complete the project early to gain the opportunity; i.e. you are only increasing the probability of completing the project early; there is no guarantee you will realize the opportunity.
So, this is an example of the enhance risk response strategy.
Exploit Risk Response Strategy
Exploiting is about doing everything to make sure the event happens. In this risk response strategy you will make sure that the opportunity is realized. Here, you take the opportunity very seriously and develop a strategy to realize it.
Simply put, in exploit risk response strategy, you increase the chance of happening the event to 100%.
Suppose you are constructing a building, and suddenly the client comes and tells you that if you complete the project two months before the actual completion date, he will give you some extra money.
This is an opportunity for you and you must realize it. Therefore you do everything to complete the project ahead of time. You give overtime to your team members, bring some more manpower, fast-track and crash (crashing — additional resources are assigned to activities to finish them earlier than planned. Crashing increases the cost) many activities, motivating team members by announcing rewards if they help you complete the project ahead of time, etc.
Obviously, you can see that in the exploit risk response strategy, you are doing everything to make sure that the opportunity is realized. You do not merely try to get this opportunity; you ensure that you get it.
Difference Between Enhance and Exploit Risk Response Strategies
The following are a few differences between the enhance and exploit risk response strategies:
- In the enhance risk response strategy you try to realize opportunity, while in the exploit risk response strategy you ensure realizing the opportunity.
- In the enhance risk response strategy you increase the probability of the opportunity happening, while in the exploit risk response strategy you increase the opportunity to 100%.
- The enhance risk response strategy can be considered the opposite of the mitigation risk response strategy, and the exploit risk response strategy can be considered the opposite of the avoid risk response strategy.
Enhance and exploit are two kinds of positive risk response strategies. If the opportunity is not very important or you don’t have any extra resources, you will go for the enhance risk response strategy. However, if you have extra resources available or the opportunity is so important that you cannot let go, you will go for the exploit risk response strategy. The strategy chosen for the opportunity will depend on the situation, requirements and resources available to you.
Here is where this blog post on the enhance and exploit risk response strategies ends. If you have any comments, please share them in the comments section.
Note that this topic is very important from a PMP and PMI-RMP exam point of view. You may see several questions from this topic on your test.