How do you respond to high-impact risks? (2024)

FAQs

How do you respond to high-impact risks? ›

Avoiding involves eliminating the risk or its causes, or changing the plan to avoid the risk exposure. This is an effective strategy for high-impact and high-probability risks, but it may require significant changes in scope, schedule, cost, or quality.

Avoiding involves eliminating the risk or its causes, or changing the plan to avoid the risk exposure. This is an effective strategy for high-impact and high-probability risks, but it may require significant changes in scope, schedule, cost, or quality.

The third step is to plan how to deal with the high-impact risks, based on the results of your risk analysis. You can choose from four risk response strategies: avoid, transfer, mitigate, or accept. Avoidance means changing your project plan or scope to eliminate the risk or its cause.

Since project managers and risk practitioners are used to the four common risk response strategies (for threats) of avoid, transfer, mitigate and accept, it seems sensible to build on these as a foundation for developing strategies appropriate for responding to identified opportunities.

The PMBOK Guide's five negative risk response strategies – avoid, mitigate, transfer, escalate, and accept – offer a comprehensive approach to managing project risks.

Some of the most common types of risk response strategies for negative risks include avoidance, risk mitigation, likelihood reduction, risk transfer, contingency plans, and acceptance of risks. Often, these risk response strategies are employed in combination to create a comprehensive risk response plan.

There are different approaches, including: Avoidance - eliminate the conditions that allow the risk to exist. Reduction/mitigation - minimize the probability of the risk occurring and/or the likelihood that it will occur. Sharing - transfer the risk.

High impact/low probability – Risks in the bottom right corner are of high importance if they do occur, but they're very unlikely to happen. For these, however, you should do what you can to reduce the impact they'll have if they do occur, and you should have contingency plans in place just in case they do.

What is an example of risk acceptance? ›

A simple example of this would be if an organization avoids opening a branch in a war zone due to the significant risks involved. Avoidance has the disadvantage of losing out on opportunities that can be gained by engaging in the activities that impose the risk; in some cases, however, this is the best business choice.

The most common strategy for handling risk is to reduce that risk to an acceptable level. Since completely eliminating risk is often impossible or too costly, risk-mitigation is a key strategy for most project managers.

Avoid Response Strategy

This response strategy is usually used for high priority risks, i.e., risks with high probability and a big negative impact.

Tips for managing positive risks

Share the risk: When you share a risk, you partner with others outside of your company or project team who can also benefit from exploiting it. Enhance the risk: Enhancing a positive risk means taking steps to add to the positive outcomes it can have on your organization.

Risk scores are a way of stratifying a population for targeted screening. They use data from risk factors to calculate an individual's score; a higher score reflects higher risk.