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11.3 Risk Response Development

Introduction

Risk response development involves defining enhancement steps for opportunities and responses to threats. These generally fall into three categories:
  • Avoidance - eliminating a specific threat, usually by eliminating the cause
  • Mitigation - reducing the expected monetary value of a risk event by reducing the probability of occurrence, reduce the risk event value, or both.
  • Acceptance - accepting the consequences.

 

11.3.1 Inputs

  1. Opportunities to pursue, threats to respond to
  2. Opportunities to ignore, threats to accept

11.3.2 Tools & Techniques

  1. Procurement
  2. Contingency planning
  3. Alternative strategies
  4. Insurance

11.3.3 Outputs

  1. Risk management plan
  2. Inputs to other processes
  3. Contingency plans
  4. Reserves
  5. Contractual agreements

 

 

 

 

 


11.3.1 Risk Response Development - Inputs

11.3.1.1 Opportunities to pursue, threats to respond to

11.3.1.2 Opportunities to ignore, threats to accept

 

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11.3.2 Risk Response Development - Tools and techniques

11.3.2.1 Procurement

Procurement, acquiring goods and services from outside the immediate project organisation, is often an appropriate response to some types of risk. For example, risks associated with a particular technology may be mitigated by contracting with an organization that has experience in that technology.

Procurement often involves exchanging one risk for another. For example, mitigating cost risk with a fixed price contract may create schedule risk if the seller is unable to perform.

 

11.3.2.2 Contingency planning

Contigency planning involves defining action steps to be taken if an identified risk event should occur.

 

11.3.2.3 Alternative strategies

Risk events can often be prevented or avoided by changing the planned approach.. For example, additional design work may decrease the number of changes which must be handled during the implementation or construction phase. Many application areas have a substantial body of literature on the potential value of various strategies

 

11.3.2.4 Insurance

Insurance or an insurance-like arrangement such as bonding is often available with some categories of risk (for a price).

 

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11.3.3 Risk Response Development - Outputs

11.3.3.1 Risk management plan

The risk management plan should cover the following:

 

11.3.3.2 Inputs to other processes

Selected or suggested alternative strategies, contingency plans, anticipated procurements, and other risk-related outputs must all fed back into the appropriate processes in the other knowledge areas.

 

11.3.3.3 Contingency plans

These are pre-defined action steps to be taken if an identified risk event should occur.

 

11.3.3.4 Reserves

A reserve is a provision in the project plan to mitigate cost and/or schedule risk. The term is often used with a modifier (management reserver, schedule reserve, etc) to provide further detail on what types of risk are meant to be mitigated. The definition may vary by application area.

 

11.3.3.5 Contractual agreements

Contractual agreements may be entered into for insurance, services and other items as appropriate in order to avoid or mitigate threats. Contractual terms and conditions will have a significant effect on the degree of risk.

 

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