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occurring and has a significant impact. Risk C has a high probability of occurring but a

low impact if it does occur.

Make certain you understand the risk tolerances of your stakeholders
before assigning probability and impacts to the risk events. If your stakeholders
are primarily risk-averse but the team is assigning probability and impact scores
that are allowing for a higher tolerance toward risks, when a risk event occurs,

your stakeholders may react in a way you didn’t expect. For example, if they
perceive a certain risk as high and the team rated it as medium and then the risk
event comes about, you may have stakeholders recommending canceling the
project because of their unwillingness to deal with the risk event. Stakeholder
reactions may bring about unintended consequences on the project, so be certain
you’re in tune with their comfort level regarding risk.

The last step in the risk process is to create an appropriate course of action for those
risks with the highest scores.

Risk Response

Risk is, after all, uncertainty. The more you know about risks and their impacts
beforehand, the better equipped you will be to handle a risk event when it occurs. The
processes that involve risk concern balance. You want to find that point where you and
the stakeholders are comfortable with the risk based on the benefits you can potentially
gain. In a nutshell, you’re balancing the action of taking a risk against avoiding the

consequences or impacts of a risk event, or enjoying the benefits it may bring.

Risk response planning is the process of reviewing the risk analysis and determining
what, if any, action should be taken to reduce negative impacts and take advantage of
opportunities as a result of a risk event occurring.

Your organization may have a predetermined formula for identifying risks that require
a response plan. For example, they may require that all risks with a total risk score
greater than 0.6 must have a response plan.

You’ll use several strategies when determining both negative risks and opportunities

and formulating your response plans. The strategies to deal with negative risks include
the following:

Avoid: Avoiding the risk altogether or eliminating the cause of the risk event

Transfer: Moving the liability for the risk to a third party by purchasing insurance,
performance bonds, and so on

Mitigate: Reducing the impact or the probability of the risk

Accept: Choosing to accept the consequences of the risk

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