Risk Response Planning Strategies


General risk response strategies.

Risk Response Planning

Risk Response for Negative Risks:

Avoidance: “I want to eradicate the risk by eliminating its cause” strategy. In this either the risk eliminated by different means or by changing the project plan. Hence probability of risk becomes zero which will improve safety to project success. This is the best possible strategy. But it is not possible to follow avoidance all the time. Example for avoidance: House construction during summer instead of rainy season.

Transference: “In case of risk occurrence, third party will bear the impact” strategy. This one is next to avoidance in terms of project safety (esp. financial risks). Here risk is not eliminated but the risk impact is transferred to another one with extra project budget cost. Example: Annual Maintenance Contract, Shop Fire Insurance, Theft Insurance, Natural Disaster Insurance.

Mitigation: “Reduce the probability & impact of risk to accepted level by good planning before hand” strategy. Mitigation is taking calculated risk. We know there could be a risk. We can not avoid it. But we know we can reduce the probability & impact by taking some measures at the start of the project. Hence we added few activities for that in execution phase.

Acceptance: “In case of risk occurrence, nothing to do” strategy. This is the Worst ever strategy & most of the risk books do not call this as strategy at all ! All unidentified risks falls under this response category.

Risk Response for Positive Risks:

Exploitation: “I want to take advantage of an opportunity” strategy. We know there is a sure thing happens with this risk. Plan all actions to get more results of that. In this way we are increasing the impact. For example adding talented resources to reduce project time.

Sharing: “Having partnership in utilizing maximum advantage” strategy. Leaving ownership of the risk to another party who can tap the opportunity for our benefit. Good example on this is outsourcing to specialized groups.

Enhancing: “Getting it done by doing the right things” strategy. Identify few enhancers or drivers for the event, perform that in such a way it increases the probability and/or impact of it.

Acceptance: “In case of risk occurrence, nothing to do” strategy. Though this is a worst negative response strategy, it is a nice one for positive risks. No need to throw stones on the tree, fruit automatically falls on your lap in the windfall!

Contingency Plan & Fallback Plan


Generally, risks are recognized as threats to project success. But risks are also used positively by organizations for efficient, effective project success.In Risk Management processes, Risk response planning process plays important role.

Risk Response Planning is the process of developing various options, strategies and actions to enhance or exploit opportunities and to reduce or eliminate threats to project objectives.

Different risk strategies are used to reduce(or enhance) the probability/impact of the identified or even unidentified/unknown risks. In certain situations, risk management team uses acceptance strategy for known risks as the option based on analysis. As a general rule, all unknown(residual) risks follows acceptance strategy as no information available about them & team will deal with those risks as they occur.

Acceptance strategy can be either passive or active. Passive acceptance requires no action except to document the strategy, leaving the project team to deal with the threats or opportunities as they occur. The active acceptance strategy is to establish a contingency plan, contingency reserve, including amounts of time, money, or resources to handle known or even sometimes potential unknown, threats or opportunities.

Contingency plan describes various specific actions that will be taken if the opportunity or threat occurs. These actions are carried out at the time of risk occurrence. So, these options should be time bound. This is mainly created for active acceptance.

Fallback plan is important in Risk Response Planning. When the contingency plan for a risk is not fully effective, team should implement fallback plan.