Risk response for negative risks

Question 1

What is a negative risk?

Answer 1

A negative risk is a potential problem that could adversely affect the project’s outcome.

Question 2

Name the five risk response strategies for negative risks.

Answer 2

• Escalate
• Avoid
• Transfer
• Mitigate
• Accept

Question 3

What does it mean to escalate a risk?

Answer 3

To escalate a risk means to bring the issue to someone with more authority when it is beyond the project manager’s control/authority.

An example would be if a subcontractor is not delivering as per the contract, and the project manager needs to involve the legal department.

Question 4

What does it mean to avoid a risk?

Answer 4

Avoiding a risk means eliminating the threat entirely so that it no longer poses a problem.

Eliminating the risk is the best case

If a vendor is going on strike, a project manager might choose a different vendor to avoid delays.

Question 5

What is risk transfer?

Answer 5

Risk transfer involves shifting the threat to a third party, such as through insurance or hiring a specialist.

EX: Insurance

Risk not eliminated; risk assumed by third party

Insurance is a common way to transfer financial risks, as the insurance company assumes the risk in exchange for a premium.

Question 6

What does it mean to mitigate a risk?

Answer 6

Mitigating a risk means reducing the likelihood of it occurring and/or its impact if it does occur.

most used

If a process is complex, simplifying it can help mitigate the risk of errors. testing etc

Question 7

What is the last resort when other risk response strategies cannot be applied?

Answer 7

The last resort is to accept the risk.

Question 8

What are the two types of acceptance for risks?

Answer 8

The two types are passive acceptance and active acceptance.

Question 9

When do we accept a risk?

Answer 9

• Can’t make required changes
• Unable to find alternatives
• Can’t eliminate all risks

Question 10

What is passive acceptance?

Answer 10

Passive acceptance involves documenting the risk in the risk register and monitoring it without taking immediate action.

Added to watchlist and action is decided upon when risk occurs

Question 11

What is active acceptance?

Answer 11

Active acceptance involves setting aside contingency reserves to deal with the risk if it occurs.

Question 12

What is a key takeaway regarding risk escalation?

Answer 12

A key takeaway is to avoid escalating too early; project managers should first attempt to resolve issues themselves.