How to Effectively Manage Project Risks - Slide 5
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Risks may be viewed as negative or positive. Negative risks are those that might impact the ability to reach project goals. Positive risks are those that can be exploited, as opportunities, for positive benefits.
Responses to negative risks may include the following: transfer the risk, avoid the risk, reduce the risk, share the risk, increase risk tolerance, accept the risk (do nothing). In some cases, risks cannot be avoided, mitigated, transferred or shared. In such cases, potential risk impacts must be accepted. This is usually the most inferior response to project risks.
Responses to positive risks (opportunities) may include the following: exploit the risk, share ratios, and enhance the risk. Enhancing a risk involves the pursuit of activities that might produce a greater return-on-investment. This is accomplished by strengthening or maximizing the chances for a positive benefit.
Risks can be foreseeable and unforeseeable. In both cases, astute project managers are prepared with some means of dealing with them. Many risk management plans address only foreseeable risks and fail to address the unforeseeable ones. For that reason, project planning must include a degree of schedule, cost, and scope margin.
Michael Taylor, a project manager with more than 30 years of experience, suggests that the most effective way to manage project risks is to adopt a process that systematically deals with the overall problem of uncertain events and conditions that might affect a project’s objectives. This process involves the following five steps.
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