Risk management is a proactive process that helps you manage 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 objective and a positive risk can have some positive effects on your project.
Since these risks are different, the strategies to manage them are also different. You must manage both types of risks accordingly.
For positive risks, you will try to increase the likelihood of occurrence and for negative risks, you will try to decrease the probability of them occurring or reduce their impact if they do happen.
The following strategies can be used to manage negative risks:
And for positive risks, you can use the following strategies:
So, there are eight types of strategies to manage risks. Accept and escalate risk response strategies are common for both types of risks.
In positive risk response 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, because in both cases you intend to realize the opportunity.
Therefore, in this blog post, we are going to discuss these risk response strategies in detail. I hope to help you understand them better.
Enhance Risk Response Strategy
Enhancing is about increasing the probability and/or impact of positive risks.
Here, you take measures to increase the chance of the event happening or its impact, but there is no assurance that it will occur, i.e., the opportunity may or may not be realized.
Assume you are constructing a building, and suddenly the client tells you that he will give you a monetary reward if you complete the project two months earlier than scheduled.
Therefore, you take several measures to realize the opportunity; for example, you use fast-tracking.
As you can see in the above example, you are only trying to complete the project early to gain the opportunity; i.e., you are increasing the probability of completing the project early. There is no guarantee you will realize the opportunity.
This is an example of the enhance risk response strategy.
Exploit Risk Response Strategy
Exploiting is about doing everything to ensure that the event happens. In this risk response strategy, you make sure you realize the opportunity, take the opportunity seriously and develop a strategy to realize it.
Simply put, with the exploit risk response strategy, you increase the chance of the event happening to 100%.
Suppose you are constructing a building, and suddenly the client tells you that if you complete the project two months before the actual completion date, he will give you a financial incentive.
This is an opportunity for you, and management asks that you realize this opportunity. Therefore, you do everything to complete the project ahead of time. You give overtime to your team members, bring in more employees, motivate the team members by announcing rewards if they help you complete the project ahead of time, etc.
This is an example of the exploit risk response strategy, as you make sure that the opportunity is realized.
In the exploit risk response strategy, you are doing everything to realize the opportunity. You do not merely try to get this opportunity; you ensure that you get it.
The Difference Between Enhance and Exploit Risk Response Strategies
The following are a few differences between enhance and exploit risk response strategies:
- In the enhance risk response strategy you try to realize the opportunity, while in the exploit risk response strategy you ensure that you will realize 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 probability to 100%.
- The enhance risk response strategy can be considered the opposite of the mitigation risk response strategy, while the exploit risk response strategy can be regarded as 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 do not have any extra resources, you will use the enhance risk response strategy. In the enhance risk response strategy, you increase the chance of the risk occurring. However, if you have extra resources available or the opportunity is so important that you cannot let it go, you will use the exploit risk response strategy. In the exploit risk response strategy, you increase the chance of the risk happening to 100%.
The enhance risk response strategy takes the situation leniently, while the exploit risk response strategy takes it aggressively. The strategy chosen for the opportunity will depend on the situation, requirements, and resources available to you.
This topic is vital from a PMP and PMI-RMP exam point of view. You may see several questions from this topic on your exam.
So, what do you think about enhance risk response and exploit risk response strategies? Let me know in the comments section below.