A risk is an unplanned event that can affect your project’s objectives if it occurs. The impact can be positive or negative.
If the risk is negative, you will try to avoid or minimize the impact. If the risk is positive, you will try to realize its benefits.
As these two are different types of risks, the strategies to deal with them are also different. According to the PMBOK Guide 6th edition, you have the following strategies to deal with positive risks:
I have discussed negative risk response strategies in another blog post, so here we will discuss positive risk response strategies.
Positive Risk Response Strategies
This risk is also known as an opportunity. They have a positive impact on your project, so you will always want them to happen. The most desired strategy for an opportunity is “exploit,” which ensures that you realize the opportunity, although it is not possible to do all the time.
Accept is the least desired strategy in which you take no action and hope the risk is realized on its own.
You use this strategy when you cannot realize an opportunity, as you lack the authority to take the necessary steps to make it happen.
You approach top management and ask them to take the responsibility of managing the risk. Once they review and accept the risk responsibility, you are no longer responsible for it; however, you will record it in your risk register for further monitoring.
In the escalate risk response strategy, you entrust top management to manage the risk, and it limits your job of monitoring it.
For example, let’s say you see an opportunity that if you buy a consumable in bulk you will get a 20% discount. However, you require a smaller quantity and buying consumables in a larger quantity will not benefit you as most of it will be wasted.
So, you ask your PMO to consult with other project managers to see if anyone requires the same consumable. If yes, you can combine the requirements and place the order in bulk and realize the opportunity.
The escalate risk response strategy was introduced in the 6th edition of the PMBOK Guide.
In the enhance risk response strategy, you try to increase the chance of a risk happening so you can realize the risk. In this case, you try to realize the opportunity. The enhance risk response strategy is the opposite of the mitigate strategy.
For example, let’s say you will complete your project in three months and the government is about to float a similar project in two months. You can bid for a new project if you complete your project in two months.
This is an opportunity for you.
Therefore, you try to compress the schedule with fast-tracking to complete the project early and you can place a bid for the new one.
Here, you are using the enhance risk response strategy because you are only trying to realize the opportunity.
In the exploit risk response strategy, you ensure that the opportunity is realized. Here, you do not try to realize the opportunity, you ensure you realize it.
For example, let us consider that your project will be completed in three months. You learn that the government is about to float a similar project in two months and you can bid for it if you can complete your project before two months.
You have an opportunity here if you complete the project ahead of time: you will get a chance to bid for your next project.
Now you have to ensure that you realize this opportunity. You take every possible measure to ensure that the project is completed ahead of time so you can bid for the new project. You bring in new resources, compress the schedule, allow overtime, etc.
Exploit is the opposite of the avoid risk response strategy.
In the accept risk response strategy, you take no action to realize the opportunity. You leave the opportunity as is, and if it happens on its own, you will benefit from it.
You use this strategy when the cost of the response is high and there is a low chance of it occurring, or the benefit does not outweigh the effort involved.
For example, suppose you may get skilled workers from another project at a lower rate if you convince them to join you. However, you do not pursue this matter and instead, let them decide whether or not they are interested in your project.
You can use this strategy for both types of risks, positive or negative.
You use the share risk response strategy when you cannot realize the opportunity on your own. So, you team up with another company and work together to realize it.
For example, suppose that because of a lack of technical capabilities, you cannot bid for a project but your company wants the project. Therefore, you team up with another company capable of doing this task and jointly bid for the project.
Here, you are using the share risk response strategy because the profit will be shared between both parties. A teaming agreement is an example of the share risk response strategy. Let us revisit the key points:
- You will use the escalate strategy so top management can handle it if you are not capable of realizing the opportunity.
- If the opportunity is not very important or you are not very interested in it, you will go for either the enhance or accept risk response strategy.
- You will choose the exploit risk response strategy if the strategy is too important to miss.
- If you want to realize the opportunity and you cannot do so on your own, you will try the share risk response strategy.
Managing risks is important for your project’s success. You must identify all risks and develop a proper risk response plan. Many project managers ignore opportunities and focus on negative risks. Positive risks are also essential because they can help you save money or time; do not ignore it.
How do you manage positive risks within your project? Share your experience through the comments section below.
Please note that this topic is vital from a PMP and PMI–RMP exam point of view. You will see many questions on this topic in your exam. Therefore, make sure you have a better understanding of these concepts before attempting the exam.