Question.3093 - Refer to the three risk response strategies (avoid, mitigate, and transfer) in the Module Nine lecture document. Discuss with examples, how you implemented at least two of those strategies in the projects you managed.
Answer Below:
Risk response strategies are the approaches we can make to dealing with the risks we have identified and quantified. There are different types of risk response strategies; Avoid, Mitigate & Transfer The Construction Industry is a very risky industry and the risk may result in huge financial losses if the risks are not managed. One such risk I faced was the fluctuation in prices of raw material. This is a big risk since the budgets are allocated for every project and any change might result in loss for the project. This risk can be transferred by entering into long term agreement with suppliers regarding the supply of materials at a fixed price. Thus in this situation the risk of price increase is transferred on the suppliers. But dependence on one supplier can again be risky, if the supplier does not stand upto commitment. Thus in this situation the risk can be Mitigated by having a consortium of suppliers, so that the dependency on one supplier is mitigated. Avoid: This response strategy is used plan responses to negative risks or threats. Using avoidance, you attempt to overcome the risk event by staying away from it or eliminating it altogether. You do something in your plan so that the risk simply won't occur. For instance, if a construction project has a risk that the dump truck won't be delivered on time and the project could be delayed and money lost, perhaps you would hire another, more reliable vendor to provide the dump truck. Transfer: Most of us understand insurance-you pay someone to protect against the risk of possible losses. Risk transference is another response strategy used to plan responses for a negative risk or threat. Here, you transfer the responsibility for the risk to someone else. In project management, insurance is one transference response to a risk, bur you might also plan to transfer the risk by hiring a vendor who is more adept at performing the work. For example, on a construction project, the general Contractor usually subcontracts building wiring to an electrical Contractor. This transfers the risk of doing the work from the general contractor to trained electricians. Transference does not necessarily eliminate the risk-in fact; the party who takes on the risk carries their own insurance. Without it, your project could still suffer grave consequences if the risk occurs. References Risk Planning. (n.d.). Retrieved May 29, 2103, from http://mis.aug.edu/drtmatls/resources/teachingsessions/projmgmt/Content/PMPWBSection05.pdfMore Articles From Project Management
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