Part 82: Strategies for Opportunities
(Project Risk Management: Plan Risk Responses)
- How do we deal with Positive Risks (Opportunities)?
- There are five strategies to deal with a risk: Escalate, Exploit, Share, Enhance, or Accept
- Escalate
- When the risk exceeds the project’s scope or when the project manager does not have authority to respond, we should escalate the risk
- Risks are escalated to the program manager, portfolio manager, or another part of our organization
- The project manager decides who to escalate the risk to
- The project team stops monitoring a risk after it has been escalated
- For example, we are building an office building. We discover that some of the land has valuable natural resources. We can make money by selling the land. The project manager has no authority to do this, so he escalates it to the organization’s management.
- Exploit
- We Exploit a risk when we want to make sure that there is a 100% chance it occurs
- Exploitation eliminates uncertainty of the positive risk happening
- For example, we are building an office building. We discover that some of the land has valuable natural resources. We set up a mining facility and exploit the natural resources for our benefit.
- Share
- When we Share a risk, we provide some ownership of the risk to a third party that can better capture the opportunity
- Can include partnerships, teams, or joint ventures
- All parties will gain from their actions
- For example, we are building an office building. We discover that some of the land has valuable natural resources. We enter into a joint venture with a mining company. The mining company exploits the natural resources and splits the profits with us.
- Enhance
- When we Enhance a risk, we act to improve its benefit.
- For example, we are building an office building. We discover that some of the land has natural resources. The market price of the resources is low but expected to increase in the future. Thus, it’s not cost-effective for us to exploit the resources now. Instead, we keep the land clear so that we can have access to exploit the resources later.
- Accept
- When we Accept a risk, we understand that the risk exists, but do nothing to pursue it
- For example, we are building an office building. We discover that some of the land has natural resources. The value of the natural resources is low, and we don’t take the risk to exploit it.