PMBoK7 Perspectives: Optimize Risk Responses

The Project Management Body of Knowledge (PMBoK7) emphasizes how managing risk with appropriate responses helps optimize project outcomes. Here are the five characteristics of optimal risk responses outlined by the Project Management Institute. 

Appropriate for the risk’s significance. The risk responses you choose should align with the impact the risk has on your project. For example, a response is appropriate if a risk could make your time-critical project finish several months late. Conversely, if a risk will cost $10 if it occurs, don’t bother spending time on it. As you consider risk response actions, determine how many people they require, any complexity changes, or changes to the outcome of the project. And ensure your risk response doesn’t create other significant risks for your project. Review your proposed response to ensure stakeholders are comfortable with it. 

Cost effective. The cost or benefit to the project if the risk occurs should be reasonable compared to the cost of risk mitigation. Don’t spend $1,000 to avoid a risk that will cost $300 if it occurs. If the risk impact is hard to quantify, such as the potential of impacting marketplace reputation, ensure your risk responses are in line with senior leaders’ perception of the risk.

Realistic within the project context.  Optimal risk responses should be easily executed, implemented quickly, using a universally understood approach. You should rethink any risk response actions that outside these conditions. Suppose you have a project involving five team members from one department. A risk response action that requires 10 people from four different departments won’t be easy to execute– it adds complexity and expands your project communication and coordination requirements. 

Agreed to by relevant stakeholders. Stakeholders should be comfortable with your response plans and should be able to participate or support your actions if needed. Take care to ensure all relevant stakeholders agree with your risk responses. You don’t want conflicts to arise when it’s time to respond to risks that are becoming issues.

Owned by a responsible person. The “responsible person” is the individual who is most capable of recognizing when a risk is coming to fruition, or has occurred, and can immediately respond. A key to effective risk management is to minimize negative impacts or maximize opportunities. To do that, it’s critical to act swiftly and authoritatively. The responsible person is usually a department manager or senior team member who handles the tasks impacted by the risk—not the project manager.

Do you use other characteristics to choose risk responses? If so, share with us in the comments sections!

For more about risk management, check out Bob McGannon new course Project Management Foundations: Risk. 

Coming Up

I’m updating my Project Management Foundations course. Look for it in Fall 2022.

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