A comparison of avoiding risks and accepting risks

Though risks usually carry a negative connotation, there are positive risks as well. Negative risks are also known as threats.

A comparison of avoiding risks and accepting risks

Share The strategies to deal with negative risks are: Negative risks response strategies have been discussed in another blog post, so here we will discuss positive risk response strategies. Positive Risk Response Strategies A positive risk is also known as an opportunity, which has a positive impact on your project so you will always want it to happen.

Accept is the least desired strategy where you take no action and hope the risk is realized on its own. Escalate This risk response strategy is used when there is an opportunity and you are unable to realize it as you lack the authority to take the necessary steps required to realize this opportunity.

Therefore, you will approach your top management or PMO and ask them to look into it.

A comparison of avoiding risks and accepting risks

Once they review the request and accept the responsibility to manage the risk, it is no longer your responsibility to manage it, though you will record this risk in your risk register for further monitoring. In the escalate risk response strategy, you entrust top management to manage the risk and now your job is limited to monitoring it.

However, you require much less and buying consumables in a larger quantity will not benefit you as most of it will be wasted. So you ask your PMO to consult with other project managers to see if anyone requires the same consumable. If yes, you can combine the requirements and place the order in bulk and realize the opportunity.

The escalate risk response strategy is a newly introduced risk response strategy in the 6th edition of the PMBOK Guide. Enhance In the enhance risk response strategy, you try to increase the chance of a risk happening so you can realize the benefits of this risk.

In this case, you try to realize the opportunity. You can say that the enhance risk response strategy is the opposite of the mitigation risk response strategy. You find out that the government is about to float a similar type of project in two months. Therefore, if you are able to complete your project in two months, you can bid for a new project.

This is an opportunity for you.

Risk Mitigation

Therefore, you try to compress the schedule with fast-tracking so the project can be completed ahead of time and you can have a chance to bid for the new project.

In the above example, you are using the enhance risk response strategy because here you are trying to realize the opportunity. Exploit In the exploit risk response strategy, you ensure that the opportunity is realized. Here you do not try to realize the opportunity; you make sure that the opportunity is realized.

You learn that the government is about to float a similar type of project in two months. Therefore, if you are able to complete your project in two months, you can bid for the new project.

You have an opportunity where if you complete the project ahead of time, you will get a chance to bid for your next project. Now you have to ensure that you realize this opportunity. You take every possible measure to ensure that the project is completed ahead of time so you can bid for the new project.

You bring new resources, compress the schedule, do overtime, etc.

BUSINESS RISK MANAGEMENT

Exploit is the opposite of the avoid risk response strategy. This strategy can be used with both types of risks, positive or negative.

Accept This risk response strategy is common for both type of risks; i. In the accept risk response strategy, you take no action to realize the opportunity. You leave the opportunity as is, and if it happens on its own, you will benefit from it. This risk response strategy is used when the cost of the response is high and there is less of a chance of it occurring or the benefit does not outweigh the effort involved.

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For example, suppose there is a chance you may get some skilled workers from another project at a lower rate if you convince them to join you.There are 5 main ways to manage risk: acceptance, avoidance, transference, mitigation or exploitation.

Here’s a detailed look at each of them. 1. Accept The Risk Accepting the risk means that while you have identified it and logged it in your risk management software, you take no action.

The risk of capital waste can be reduced through this type of strategy, but a degree of risk remains. Transfer of Risk In some instances, businesses choose to transfer risk away from the organization.

Accepting risk occurs when a business acknowledges that the potential loss from a risk is not great enough to warrant spending money to avoid it. Also known as "risk retention," it is an aspect of. Multiple ways of managing risk are often utilized simultaneously.

Avoid, Accept, or Transfer? Understanding and Managing Risk | News | Cowan Insurance Group

Risk Avoidance (elimination of risk) Completely avoiding an activity that poses a potential risk. While attractive, this is not always practical. By avoiding risk we forfeit potential gains, be it in life, in business or in with investments. (accepting risk) Risk retention. Therefore, this is the best way to risk management strategies for negative risks.

Here is an example of avoiding a risk. Suppose your team is scheduled to construct a mall in November and you run the negative risk of slow progress during the months of November to January, due to excessive snow fall. Accepting the risk means that while you have identified it and logged it in your risk management software, you take no action.

You simply accept that it might happen and decide to deal with it if it does.

How to Respond to Negative Risks in Project Risk Management Strategies