Taking care of opportunities is one of the antidotes to the project success. And, sometimes cautious responses to project risks help in realizing opportunities. But, many of us believe that risks create an adverse impact on projects; it is not always true. Risk can be positive also. Now the question is – what is a positive risk?
It is something like an opportunity is there, but we have some risk to realize it. If these risks occur, you will get gains or benefits in the projects. And, we need risk responses to realize these risks.
The next question is what the positive risk response strategies are? These are strategies:
- To make it happen, or
- Increase its probability, or
- To see if any collaboration can help to grab the opportunity.
These are Positive Risk Response Strategies.
The difference between negative and positive risks:
If positive risks occur, they have a positive impact on the project objectives. These favorable opportunities tend to save costs and other resources of the project. Unlike Negative Risks, here you aim to make this uncertain event happen.
In negative risks, you intend to avoid or to reduce its impact. This is the basic difference between a positive and negative risk.
What are the strategies for dealing with positive risks? – Following are the five strategies for positive risk responses:
- Escalate: You escalate the risk to your seniors because you do not have the authority to execute steps of risk response strategies.
- Exploit: You explore strategies to make sure risk happens for sure.
- Share: You make a partnership to realize risk as you feel you cannot execute it alone.
- Enhance: You are not 100% sure of risk realization so you explore strategies to increase its probability.
- Accept: You choose not to take any actions to realize risks, but you monitor it if it becomes important to get risk response strategies.
Let’s discuss these risk response strategies one by one:
This risk response strategy is right when the project team or the project sponsor agrees that an opportunity is outside the scope of the project or that the proposed reply would exceed the project manager’s authority– Based on PMBOK® Guide
As a project manager, you may feel odd to escalate to grab the opportunity. But, you need it when risk response is outside the influence area of the project. In other words, you don’t have the authority to execute risk response strategy steps.
In this case, you need to escalate it. Now the risk response has to be taken care of at the program, portfolio or organization level. Yes, after escalation you need to keep an eye on it. But since you have escalated it, the ownership of risk realization goes to whom you have escalated. In other words, after escalation, these opportunities are not monitored further by the project team. But you record these risk responses in the risk register.
Let’s take an example; you observed if you add a new feature in your mobile app, it will ease the user’s life. This benefit can increase the success of the project. It is an identified opportunity, and you need a risk response strategy to make it happen.
Your project does not have the expertise to add the same. You need specialization, and all available ones are busy in another project of the same program. You don’t have the authority to use those resources directly. As these things have to be taken care at the program level, you decided to escalate to the program manager.
Now, program manager owns the realization of risk and see what can be done to get expertise for your mobile app. You also keep an eye on the risk response and record them in the risk register.
This strategy seeks to remove the uncertainty related with a particular upside risk by ensuring the opportunity definitely happens. – Based on PMBOK® Guide
In risk exploitation, we see a positive risk that needs a risk response strategy to make it happen. In this strategy, we make sure the opportunity happens. The project team invests the resources in realizing the opportunity. It is exactly the opposite of what Avoid strategy is in Negative Risks. Here, the probability is increased to one instead of zero. The exploited opportunities once put to use are removed from Risk Register since they are no more uncertain.
These strategies are employed to opportunities that may have a significant impact on the project objectives. For example, experimenting with new technology may result in sparing 50% of the development time. It is critical to realize, and the team comes up with a risk response to make it happen anyhow.
Project team tries to exploit as many critical positive risks as possible. This strategy is the opposite of the Avoid risk response strategy for a negative risk.
The increase or enhance strategy is used to increase the probability and/or the positive impacts of an opportunity. – Based on PMBOK® Guide
In this strategy, you take a proactive to increase the probability of the opportunity. This strategy is the opposite of Mitigate in negative risks. In this approach, we enhance the probability or impact. We use actions in advance to realize the positive event to a greater extent. The project team chooses this strategy when critical positive risks go unexploited.
Let’s take an example – you are planning to send a few project team members for a Project Management Professional (PMP)® training to increase the probability to get a government project. Here, you cannot ensure to exploit the opportunity, but you can enhance the probability.
Distibute or Sharing a positive risk involves allocating some or all of the ownership of the opportunity to a third party who is best able to capture the opportunity for the benefit of the project. –Based on PMBOK® Guide
Sometimes you feel that you cannot alone realize the benefits of positive risk. But, if you collaborate with another team or an organization, you can make it happen. In this case, you use the Share risk response strategy.
You put this strategy when you need a partner in parallel to realize the opportunities in full effect. It means, when it becomes challenging to Exploit or Enhance the positive risk alone, project team opts for Share strategy.
The example could be forming risk-sharing partnerships, teams, or joint ventures. When you are building a project and some part of it you cannot do it alone – You can collaborate with another company, and you share the benefits.
“Gain or Accept an opportunity admit its existence but no proactive action is taken. This strategy may be appropriate for low-priority opportunities, and it may also be adopted where it is not possible or cost-effective to address an opportunity in any other way.” – Based on PMBOK® Guide
It means you do not need to pursue risk response actively. Instead, you keep this in the Risk Register to watch the triggers and gauze when to realize this opportunity. You simply take no action to realize the opportunity. You see that if it happens without any action, then you will take benefit. In another case, you accept it till you observes – it is becoming critical, and now a risk response is a must.
For example, the adaption of new technology may result in cost saving. This is a project opportunity example. You keep track of how important this adoption. And when it seems fruitful, you come up with risk response strategy.
Risk acceptance can be an active or passive. Like, If you have reserved some money for a particular risk but no action is planned, it is active acceptance. In passive acceptance, you do not take any action beyond documenting the decision.
Let’s summarize the key points of all these positive risk response strategies:
- Escalate: Do nothing as response is not in your influence area. It is managed at the program level, portfolio level, or another relevant part of the organization, and not on the project level.
- Exploit: You do everything to make it happen because it is critical to realize. Like explore the new technology and team invests it into the project.
- Share: When you cannot realize risk alone. You collaborate with other team; create a joint teams to explore this further.
- Enhance: You work to increase the probability of its happening or also work to improve its impact.
- Accept: Here you feel not to do anything as of now, keep it in the risk register and review it periodically.
I’m sure I have answered all your questions on the Positive Risk Response Strategies.
The following video gives an excellent overview of positive risk response strategies: Here you will get a clear idea about:
- How in Exploit do we make an event a reality? :
- How you increase the probability of an event in Enhance?
- How you involve others in Share?
In which cases you Accept the risk?
- And in which cases you need to Escalate risks?
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