Concepts
Risk response planning is a crucial step in any project, particularly for those studying for the PMI Risk Management Professional (PMI-RMP) exam. This process involves developing strategic options and deciding on actions to address potential risks that may impact a project’s objectives negatively. A core objective of risk response planning is determining the time frame for these responses, along with identifying the action owners.
I. Time-Bound Risk Response Actions
Different risks have different urgencies, and mitigating responses must be executed within specific time frames. This determination of urgency is known as time-bound risk response actions. This step is critical in preventing risks from causing significant damage to a project by taking quick, timely action.
For example, suppose a construction project has identified a risk that a heavy rainfall could affect the project progress. The time-bound action could be to monitor weather patterns intensively and prepare to stop work if necessary within a defined period, say 2 hours, before the rainfall.
II. Risk Response Strategies
There are four primary risk response strategies that you can employ:
- Avoidance: This involves changing the project plan to eliminate the risk or condition from occurring.
- Transfer: The project team can shift the risk impact to a third party, together with the ownership of the response.
- Mitigation: This strategy aims to reduce the probability of occurrence or the impact of a risk.
- Acceptance: If the project team decides that a risk cannot be avoided, transferred, or mitigated, it can be accepted.
For the PMI-RMP exam, understanding these strategies is a core requirement.
III. Identifying Action Owners
Effective risk management requires assigning responsibility for each potential risk to individuals or teams, referred to as “action owners”. These individuals are tasked with implementing the risk response strategy and monitoring the risk throughout the life cycle of the project.
For example, in a software development project, a risk could be that the project might not meet its deadline because of coding challenges. The action owner assigned could be the lead developer, tasked with scheduling additional training sessions for the team to mitigate the risk.
IV. Deciding the Risk Response Actions
Different strategies require different risk response actions. The action should be proportional to the risk, effective within its context, cost-efficient, agreed upon by all parties, and owned by a specific person or team. The table below provides examples:
| Risk Response Strategy | Risk Response Action | Action Owner |
|---|---|---|
| Avoidance | Modify project plan | Project Manager |
| Transfer | Obtain insurance | Financial Manager |
| Mitigation | Implement extra precautions or plans | Risk Manager |
| Acceptance | Document and monitor risk | Project Team |
In summary, understanding and applying the concepts of time-bound risk response actions, risk response strategies, and action owners are fundamental for efficient risk management and a critical component of the PMI-RMP exam. Always remember that risk management is a proactive, not reactive, process.
Answer the Questions in Comment Section
True or False: The risk owner is always the project manager.
- True
- False
Answer: False
Explanation: While the project manager can be a risk owner, typically the risk owner is the person or group best able to manage the identified risk.
A risk response strategy focused on enhancing opportunities is known as:
- a. Avoidance
- b. Exploit
- c. Transfer
- d. Mitigate
Answer: b. Exploit
Explanation: Exploitation strategy aims at making sure the opportunity is realized, it’s used in positive risk response planning.
In the risk response process, evaluating the effectiveness of the risk response happens before deciding the risk response actions. True / False
- True
- False
Answer: False
Explanation: The effectiveness of the risk response is evaluated after the implementation of the risk response actions.
Which of the following is not a risk response strategy?
- a. Transference
- b. Mitigation
- c. Acceptance
- d. Ignorance
Answer: d. Ignorance
Explanation: Ignorance is not a recognized risk response strategy within Project Management. The four main strategies are mitigation, transference, acceptance, and avoidance.
Risk response actions are commonly time-bound. True / False
- True
- False
Answer: True
Explanation: Risk response actions are typically assigned with specific time frames for completion to manage the risk within the project timeline.
Who typically decides the risk response actions?
- a. The project team
- b. The project manager
- c. The risk owner
- d. All the above
Answer: d. All the above
Explanation: The decision on risk response actions is typically a combined effort involving the project team, project manager, and risk owner for comprehensive understanding of the risk.
Which risk response strategy seeks to reduce the probability or impact of a negative risk or threat?
- a. Transfer
- b. Acceptance
- c. Mitigate
- d. Exploit
Answer: c. Mitigate
Explanation: Mitigation seeks to decrease the probability or impact of an adverse risk event by planning for it beforehand.
True or False: The person assigned to undertake a risk action is known as the stakeholder.
- True
- False
Answer: False
Explanation: The person assigned to undertake a risk action is known as the action owner.
What action ownership repartition strategy provides the best way to manage a risk regarding a scope change?
- a. Avoidance
- b. Transfer
- c. Acceptance
- d. Exploit
Answer: b. Transfer
Explanation: Transfer strategy is used when the team assigns the ownership of a risk to a third-party who is best equipped to manage the occurrence of that risk.
A risk response strategy that aims at eliminating the uncertainty related to a particular upside risk by ensuring the risk definitely happens is:
- a. Share
- b. Enhance
- c. Exploit
- d. Escalate
Answer: c. Exploit
Explanation: Exploitation tries to eliminate the uncertainty associated with a particular upside risk by ensuring the opportunity definitely happens.
“Acceptance” risk response strategy is always passive. True / False
- True
- False
Answer: False
Explanation: Acceptance can be active or passive. Active acceptance may involve developing a contingency plan to execute if the risk occurs. Passive acceptance involves no specific action, just acknowledging the risk.
Risk responses must always be cost-effective. True/False
- True
- False
Answer: True
Explanation: Risk responses should always be cost-effective and appropriate for the severity of the risk, and also aligned with the project objectives. Inappropriate and costly responses can cause negative impact on project’s budget and schedule.
Really appreciate the insights you shared on risk response strategies. Especially useful as I’m preparing for the PMI-RMP exam!
Great explanation on identifying action owners for risk responses!
Can someone clarify how to decide on risk response actions that are time-bound?
Thanks for this informative post!
I appreciate the detailed explanation of risk response strategies.
What are some best practices for identifying the right action owners?
This blog post didn’t meet my expectations. It lacks depth in explaining time-bound risk responses.
Excellent breakdown of different risk response strategies!