In the previous sections, we learnt how to analyze all the risks that we have identified in our project so far. So, what is the next logical step now?
You know what the risk is, its probability, and its impact including the monetary impact and hence are in a great position to decide how to handle the risk appropriately, isn’t it? So, the next logic step would be to decide – what to do in response to each of those risks. That is what we are going to do in this section which is titled “Plan Risk Responses”
Purpose of Plan Risk Responses:
The purpose of this process is to develop options and actions that will reduce the threat of negative risks and/or increase the opportunity of the positive risks.
Simply put, you just decide what you are going to do for each of the risk. Plus, an owner is assigned for each risk so that he/she can track the risk appropriately.
Assigning a risk owner is better than a single person keeping track of an unmanageable quantum of risks. In real life, if you perform Risk Identification for a large Project the list will run into numerous risks. So, if you ask a single person to track all of them, it is quite possible that some of the risks maybe missed. So, its better we assign a manageable number of risks to different people and let them stay on top of those risks.
Once the possible responses for each of the risks are formulated, we typically must ask ourselves the following questions before finalizing the response for each risk:
1. Is the response appropriate in comparison to the significance of the risk?
2. Is the response cost effective in meeting all the challenges posed by the risk?
3. Is the response realistic?
4. Have all parties (stakeholders) agreed to the response?
5. Has an owner responsible for the risk been assigned?
6. Is the response planned for execution at the right time?
7. Has the best response been selected from the available options?
If you can answer yes for all of at least a majority of these questions, then we can be pretty sure that the response we have selected would be good.
A point to remember here is that, the responses we develop and when we actually implement those responses depends on various factors including the probability and impact of the risk. Also, in some smaller projects, quantitative risk analysis may or may not happen. In such cases, the “Plan Risk Responses” activity happens right after Qualitative Analysis. However, it would be a good idea to do Quantitative Analysis before planning responses.
This whole Plan Risk Responses activity can be summarized using the image below:
We take a bunch of inputs which include your risks, their details, the analysis you have performed so far and any other relevant information, we apply some response strategy for each of those risks and then formulate the Risk Response Plan for the project.
Remember that there are different strategies for different risks. For ex: If a risk could cause losses (A Negative Risk) we may want to find out options to avoid it whereas if a risk could cause profits or benefits (A Positive Risk also known as an Opportunity) then we may want to capitalize on it to ensure that the benefits are achieved.
Don’t worry just yet about the strategies because there will be whole chapters dedicated to them shortly…
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