Risks can be internal or external, and projects may face a combination of both. Accept: Acceptance is an option when there is no other solution, but would only be used for low-impact risks that have a low probability of occurring.Mitigate: Mitigation aims to reduce either the likelihood or the level of impact of a risk, and is used for risks that are likely to occur, but also likely to be low-impact.This response is common for risks that have a high negative impact but a low probability of occurring. Transfer: This method refers to transferring risk to another party (for example, the act of purchasing insurance moves the risk to the insurance provider). ![]() Avoidance tactics may require greater investment (in order to develop alternative strategies), but this additional cost and effort is appropriate for high-impact, high-probability negative risks. Avoid: Avoiding risks is ideal, and especially important if the risk is high impact and likely to occur.The response you choose will depend on the probability of the risk occurring and the potential severity of its impact on a project. ![]() Once you’ve identified and evaluated a risk, there are several potential responses. Once completed, the plan serves as a guide for everyone involved in a project and is particularly important as a tool to communicate with key stakeholders. The process also includes identifying both the costs and actions necessary for implementing the plan. The planning process enables managers to clearly identify risks, and then develop and document risk mitigation strategies and contingency plans. The overall goal of a risk management plan is to manage risk in a way that ensures a successful project outcome. It is generally the project manager’s role to maintain the plan and update it periodically to ensure ongoing clarity and effectiveness. A risk management plan is typically included as part of a larger project plan, and is initiated early in the project lifecycle the risk plan then evolves as the project progresses. Project risk management seeks to maximize positive risks while avoiding or mitigating negative risks. The Project Management Body of Knowledge (PMBOK® Guide, 5th Edition) defines project risk as “an uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project objectives, such as scope, schedule, cost, or quality.” Notice that these risks can be considered positive or negative depending on their effects.
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