Imagine you have a large amount of credit card debt. You decide to eliminate one of the causes of your debt. So, you cut up your credit cards.
What if you had an opportunity to increase company revenue by getting a product to market a few months early? You could assign your most skilled resources to your critical path tasks.
In our projects, we face threats that may limit our ability to achieve our goals. We also see opportunities, if properly seized, that could allow us to make greater progress. Our job is to treat risks to enhance opportunities and reduce threats. We can optimize our risk responses over time.
The PMBOK defines risk as “an uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project objectives such as scope, schedule, cost, and quality.” Therefore, project managers should plan for both threats and opportunities. Here are eight strategies that we may employ.
|Negative Risk Strategies (Threats)||Positive Risk Strategies (Opportunities)|
|Avoid – Eliminate the threat normally by removing the cause of the threat altogether (e.g., remove activities).||Exploit – Ensure that opportunity is realized (e.g., purchase a higher quantity of materials to get additional price discount).|
|Transfer – Shift the impact of the threat to a third party (e.g., insurance, agreements).||Share – Assign all or part of the opportunity to a third party (e.g., team agreement between internal and external parties).|
|Mitigate – Reduce the probability or impact of a threat (e.g., requirements review, testing).||Enhance – Increase the probability or impact of an opportunity (e.g., add more resources to a task).|
|Accept – Acknowledge the risk but take no action unless the risk occurs.|
|Escalate – Escalate risks outside the scope of the project or that the proposed response exceeds the project manager’s authority. These risks are escalated to individuals within the organization who will manage the risks.|
Notice how the risk strategies for threats and opportunities are often opposites. For example, in mitigating a threat, we reduce the probability or impact of the threat. As we enhance an opportunity, we increase the probability or impact of the opportunity.
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