As professional project managers, we all know that each project comes with its own set of risks. Those risks depend on the project specifications and scope, and no two projects are alike. Each project’s risks can be categorized into specific risk response categories in order for project managers to effectively address and respond to each of these risks and track their progress accordingly.
Avoidance – Avoidance doesn’t necessarily mean that project managers should avoid or ignore the risk, but that the risk itself should be avoided at all costs. Examples of such risks to a project that absolutely must be avoided clearly depends on the organization, but can include late product delivery to the customer, or the severe injury or even death of a customer.
Mitigation – This is one of the most popular risk response methods in project management. Although it can be an expensive measure, it is extremely effective and a popular approach. Mitigation is the category that risks fall into but aren’t extremely critical. All risks are critical and should be dealt with, but mitigation allows for project managers to address the risk and reduce the probability or impact of a risk actually occurring.
Transference – Transference is the method in which project manager can take a risk—or the consequences of a risk—in a project and transfer it to a third party or a party outside of the organization. A common example is when an organization works with insurers, such as warranties on particular products or machinery, subcontractors, or vendors. Transference is also known as “deflection” in project management.
Acceptance – Finally, acceptance is the risk response category in which project managers have addressed certain risks and have accepted the consequences of those risks. For example, if a project is submitted late and ultimately will incur late product delivery. Typically the customer is informed of this ahead of time and everyone accepts that the risk will most likely occur.
In addition, there are two types of acceptance: passive and active. Passive acceptance is when project managers don’t take any action in managing the particular risk. On the other hand, active is when project managers do in fact take action in preventing a risk for occurring or even developing fallback plans or contingency plans for if the risk occurs.
So what are some basic actions project managers can take when developing risk response plans? Communication is one of the biggest areas where project managers can identify each of the risks, develop risk response plans, and address each of the risks. Some communication methods can include holding planning or team meetings on a regular basis, or develop a project risk register to document each of the risks, the plans of attack, and address each of them with the team members.