The Appropriate Risk Response for Positive and Negative Events
Question
There are seven risks responses that a project manager can choose from.
Which risk response is appropriate for both positive and negative risk events?
Answers
Explanations
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A. B. C. D.contingency reserves to deal with risks, in case they occur.
Acceptance is the only response for both threats and opportunities.
Answer: C is incorrect.
Sharing is a.
Only acceptance is appropriate for both positive and negative risk events.
Often sharing is used for low probability and low impact risk events regardless of the positive or negative effects the risk event may bring the project.
Acceptance response is a part of Risk Response planning process.
Acceptance response delineates that the project plan will not be changed to deal with the risk.
Management may develop a contingency plan if the risk does occur.
Acceptance response to a risk event is a strategy that can be used for risks that pose either threats or opportunities.
Acceptance response can be of two types: Passive acceptance: It is a strategy in which no plans are made to try or avoid or mitigate the risk.
Active acceptance: Such responses include developing seeks to lower the probability and/or impact of a risk event.
The seven risk responses available to project managers are:
Avoidance - this is where the project manager takes steps to eliminate the risk entirely, for example, by changing the scope of the project.
Mitigation - this is where the project manager takes steps to reduce the likelihood and/or impact of the risk, for example, by implementing controls or contingency plans.
Acceptance - this is where the project manager acknowledges the risk but decides to take no action, either because the risk is minor or because the cost of taking action outweighs the potential impact of the risk.
Transference - this is where the project manager shifts the risk to a third party, for example, by outsourcing a portion of the project to a vendor.
Sharing - this is where the project manager shares the risk with another party, for example, by entering into a joint venture.
Exploitation - this is where the project manager takes steps to increase the probability and/or impact of a positive risk event.
Enhancement - this is where the project manager takes steps to maximize the benefits of a positive risk event.
The appropriate risk response for both positive and negative risk events is acceptance. This is because sometimes it may not be feasible to avoid, mitigate, transfer, or share a risk. In such cases, the project manager may choose to accept the risk and plan accordingly. Additionally, positive risks, also known as opportunities, may not always require a risk response. Instead, the project manager may choose to accept the risk and exploit or enhance the opportunity.
