common risk responses
Kloppenborg, Anantatmula, and Wells (2019) outlined eight common risk responses. Risk avoidance, transfer, and mitigation are applied in any situation of threat. Exploit, share, and enhance are applicable in a condition characterized by an opportunity. Research and accept serve in both threat and opportunity circumstances.
Mitigation: The response is necessary when an effort put to limit risk by either reducing the likelihood or impact of the risk. Likewise, when risk is identified, it is essential to transfer to another organization. If a risk is realized, the project manager should change the plan to evade it.
A situation characterized by exploitation of risk requires a project manager to establish a method of taking the opportunity and sends it back to the sponsor for supplementary demanded sources. If a share presents an opening in the course of the project, the prospects lead to the creation of revenue. Thus, the project manager understands that he puts his best resources to enhance the presented opportunity. Equally, in case of a known risk, the project manager accepts it and goes ahead with the plan of the project. Accepting a risk occurs when the project manager knows it exists. Such risks have a negligible impact on the project that the project manager determines to admit it and continue with the original plan. Risks related to research occurs when the project manager researches the risk to establish if it would be worthy of making a course of strategy to the project. In some instances, when this is completed, the project manager may determine that the risk is minimal.
In a project cycle, there is an opportunity for any of these to arise. Thus, the project manager researches the risk. After completion of the study, the project manager determines the need to make changes in a bid to limit the risk, prompting the use of the mitigation process. In this sense, the incidence of a new risk would be low, and the project manager determines to admit it due to less impact. During this stage, the project manager develops a new tool for the project.
Risks in Industry
The most common risks in the service industry include Cost, operational, and market risks.
Market Risks: In the service industry, market risks requires mitigation, especially in cases when the project manager is unable to eliminate, but can reduce their impacts. Similarly, the use of transfer response would be significant, mainly through the consumption of insurance purchases, guarantees, and warranties.
Cost Risks: Here, a suitable response would require avoiding and transferring risks. As such, a project manager would change the plan. When team costs are covered with management costs, the manager can accept. But in case of additional costs associated with implementation, the project manager can transfer to other organizations.
Operational Risks: The case of operational risks could be opportunities for the project manager. As such, they can be shared with the project sponsor for the allocation of additional resources. Similarly, sharing operational risks could provide the parties with profit.