Chap 11.5 Plan Risk Response

PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com)
Chapter 11 –
Project Risk Management
PMP
Trainer: Anand BobadePMBOK 6th Edition, 2019, All rights reserved.
Plan Risk Response
SIXTH EDITION

11.5 Plan Risk Responses
Plan Risk Responses - Definition
Plan Risk Responses : ITTO
Strategies for Negative Risks or Threats
Strategies for positive risks or opportunities
Contingent Response Strategies
Risk Trigger
Review

Project Risk Management Processes
Plan Risk management Identify Risk
Perform Qualitative
Risk Analysis
Perform Quantitative
Risk Analysis
Plan Risk Response Implement Risk Monitor Risk
P
MC
P P P
P E

Developing options & actions to enhance
opportunities & reduce threats to project objectives.
It addresses risks by their priority by updating
budget, schedule & PMP.
Plan Risk Responses -> Definition

Plan Risk Response -> ITTO
Expert Judgment
Data Gathering
Interpersonal and team skills
Strategies for Threats
Strategies for Opportunities
Contingent Response
Strategies
Strategies for overall project
risk
Data analysis
Decision making
Project Management
Plan
Project documents
Enterprise
environmental factors
Organizational process
assets
Change request
Project document updates
PMP updates
Inputs Tools & Techniques Outputs

Project Management
Plan
Project documents
Enterprise
environmental factors
Organizational process
assets
Plan Risk Responses->Inputs

Project
Management Plan
Resource
Management plan
Risk Management
plan
Cost Baseline

Project documents
Lessons learned
register
Project Schedule
Project team
assignments
Resource calendars Risk Register Risk Report
Stakeholder Register

Expert Judgment Data Gathering
Interpersonal and
team skills
Strategies for Threats
Strategies for
Opportunities
Contingent Response
Strategies
Strategies for overall
project risk
Data analysis Decision making
Plan Risk Responses->T&T

Expert Judgment
Plan Risk Responses ->T&T->Expert Judgement
Expertise from individuals or groups with expertise in the risk response planning
Threat and opportunity
response strategies
Contingent response
strategies
Overall project risk
response strategies
Alternative risk
response strategies

Data Gathering
Interviews
• Experience & Historical data.
• Expertise in developing risk responses
• Knowledge about specific individual project risks
Plan Risk Responses ->T&T->Data Gathering

Strategies for
Negative Risks or Threats
It helps to manage Negative impact on Project Objectives:
Plan Risk Responses->T&T->Strategies for NR or Threats
Escalate Mitigate Transfer Avoid Accept
Strategy to manage each Risk should be unique
It should match Risk’s probability & overall impact on the project objectives

Strategies for
Escalate:
• A threat which is outside the scope or the proposed response would exceed the project
manager’s authority
• then escalate to the Program or Portfolio level with the agreement from the project team
and sponsor
Mitigate:
• Reduce impact or probability of risk to an acceptable threshold.
• Take early actions to reduce impact/probability.
Transfer:
• Shift responsibility of risk consequence to another party.
• Does NOT eliminate risk.
• Effective in dealing with financial exposure.
Avoid:
• Eliminate a risk by avoiding cause/source of risk Generally done by changing PMP.
• PM may isolate of change Project objective.
• Protect project from impact of risk.
Accept:
• Risk is acknowledged.
• No action taken unless Risk occurs.
• Used when its not possible or cost effective to address risks.

Strategies for
Mitigate:
• Reduce impact or probability of risk to an acceptable threshold.
• Take early actions to reduce impact/probability.
When it is not possible to reduce probability, mitigation should
consider mitigating impact.
E.g., Designing redundancy in system will reduce impact from
failure of the original component.
Examples:
Project Staging
Adapting less
complex process.
More testing
Prototyping
Redundancy
planning
Use more qualified
resources/Supplier

Strategies for
Transfer:
• Shift responsibility of risk consequence to another party. Does
NOT eliminate risk.
• Effective in dealing with financial exposure.
Buy/subcontract: move liabilities
Insurance: liabilities + bonds + Warranties
Selecting Procurement contracts to transfer Risks:
• Risk transferred to sellerFixed Price contract:
• Risk transferred to BuyerCost plus contract:

Strategies for
Avoid:
• Eliminate a risk by avoiding cause/source of risk
• Generally done by changing PMP.
• PM may isolate of change Project objective.
• Protect project from impact of risk.
Changing implementation strategy.
In-house development (no subcontracting).
Reduce scope to avoid high risk deliverables.
Clarify requirement.
Improve communication.
Acquiring expertise.
Radical avoidance strategy: Shut down project.
Examples:

Examples:
Strategies for
Accept:
• Risk is acknowledged.
• No action taken unless Risk occurs.
• Used when its not possible or cost effective to address risks.
• Develop a contingency plan to
execute if the risk occur.
Active
Acceptance
• Deal with the risks as they occur
(No Plan B prepared)
Passive
Acceptance
Commonly used strategy - Contingency reserve.
Established reserve for time, money or resources.

Strategies for Positive
Risk or Opportunities
Seek ways to make positive risks or opportunities more likely to occur:
Plan Risk Responses->T&T->Strategies for PR or Opportunities
Escalate Exploit Enhance Share Accept

Exploit:
• Ensure opportunity is realized.
• You do not try, but work hard & ensure opportunity is 100%
realized.
Example:
Using new technology may result in saving 50% of the development
leading organization to complete another initiative.
To exploit:
Staff will be trained on technology & relevant technology expert will
be hired.
Using organizations most talented resources for faster
delivery.
Technology upgrade.

Enhance
• Increase chances of opportunity occurring.
• Take proactive action to enhance opportunity.
Example:
Using new technology may result in saving 50% of the development
leading organization to complete another initiative.
To Enhance:
PM will monitor work closely, Compress schedule by adding resources &
doing parallel work etc.

Share:
• Not capable of realizing opportunity on your own.
• Work with other parties to share Benefits
Example:
Lack of technical capability is not allowing you to bid for a contract, and
you want to realize this opportunity.
To share:
You will team up with other company expert in technology to apply for
contract.
Risk sharing Partnership. Special purpose companies. Joint Venture.

Accept
• Willing to take advantage of opportunity if it comes, but not actively
pursuing it.

Contingent
Response Strategies
Reponses plans to the Risk occurrence.
Plan that deals with
events when it
occurs.
This is Risk response
plan.
Contingency plans
Plan that gets
Implemented when
the contingency
plan fails or is not
fully effective.
Fall back plans:
Plan Risk Responses->T&T->Contingent Response Strategies

Contingent
Response Strategies
Contingency plans:
• Plan that deals with events that may or may not occur.
Construction project Risk:
There is a risk that rain may fall, which will damage your materials lying
in the open.
Plan:
If there is an indication of rain, all materials will be covered with a
plastic sheet. Also, after rain, you will bring a blower/vacuum pump to
clean & dry wet materials.

Contingent
Response Strategies
Fallback plan:
• Plan that gets Implemented when contingency plan fails or
not effective.
Construction project Risk:
• There is a risk that rain may fall, which will damage your materials lying in the
open. Suppose rain continued for a long time than anticipated, leading material
to be useless.
Plan B:
• If material is useless, you will reorder them from a pre-identified supplier &
start the work immediately.
Plan Risk Responses->T&T->Contingent Response Strat.

Contingent
Response Strategies
Risk triggers:
• Indications that a risk has occurred or is about to occur.
• Also called as warning signs/risk symptoms
• Engage your Legal team to monitor the status of this
regulation.
• Inform PM if change happens.
Risk:
Change in government
regulation
• Establish monitoring mechanism for CPU & disk
usage.
• Inform PM if limit is reached.
Risk:
Server capacity is insufficient
to meet peak demand
Events that trigger the response should be documented & tracked.

Contingent
Response Strategies
Assigned the
responsibility of
ensuring that risk
response is effective.
Also, he may Plan
additional risk
response if required
Risk Owner
Risk owner depute a
risk action owner in
very large project
where it will be
difficult for risk
owner to manage all
risk on its own.
Risk Action Owner
Plan Risk Responses->T&T->Contingent Response Strat.

Strategies for overall
project risk
Avoid Exploit Transfer/Share Mitigate/Enhance Accept
• involves taking focused action (bring back within the threshold) to reduce the
significantly negative project risk which is outside the agreed upon risk threshold
Avoid
• involves taking focused action to capture the significantly positive project risk which
is outside the agree upon risk threshold
Exploit
• Involve a third party, f the organization is unable to address the overall project risk
effectively.
Transfer /
Share
• Involve changing the level of overall project risk
Mitigate /
Enhance
• Even if the overall project risk is outside the agreed-upon threshold, no proactive
response strategy is developed & project chose to continue as is.
Accept
Plan Risk Responses->T&T -> Strategies for overall project risk

Data analysis Alternatives analysis Cost-benefit analysis
Cost effectiveness of a response strategy = change in impact level / implementation cost
Higher the change in impact level, more the effectiveness
For opportunities this level should increase
For threats this level should decrease
Plan Risk Responses->T&T -> Data analysis

Change request
Project document
updates
PMP updates
Plan Risk Responses->Outputs

PMP updates
Schedule
Management plan
Cost Management
Plan
Quality Management
Plan
Resource
management Plan
Procurement Plan Schedule baseline
Scope Baseline Cost Baseline

PMP updates
Scope Baseline: New modified or omitted work
Schedule baseline: Because of scope change schedule
may change.
Cost Baseline: Because of scope & schedule change.
Schedule MP: changes in tolerances or behaviour
related to resource levelling & loading.
Cost MP: changes in tolerances or behaviour related to
cost accounting, tracking & reports.
Quality MP: changes in tolerances or behaviour related
to requirements, quality assurance & control.
HR MP: Changes in tolerances or behaviour related to
staff allocation.
Procurement MP: Changes to procurement strategy.
Plan Risk Responses->Outputs->PMP update
Plans are
updated to
Reflect
changes in
process &
practice.

Project document
updates
Assumption log Cost Forecasts
Lessons learned
register
Project Schedule
Project team
assignments
Risk Register
Risk Report

Project document
updates
Risk Register Assumptions log updates
Technical Documentation Updates Change Requests
Project document Updates
Plan Risk Responses->Outputs->Proj. doc. updates
Risk
Register
Updates:
Risk Owner &
responsibiliti
es
Agreed
Response
strategy
Budge &
schedule
activities
Trigger
conditions
Residual
Risks
Secondary
Risks
Contingency
plans &
Triggers
Contingency
reserves

Plan Risk Responses - Definition
Plan Risk Responses : ITTO
Strategies for Negative Risks or Threats
Strategies for positive risks or opportunities
Contingent Response Strategies
Risk Trigger
Plan Risk Responses -> Review

Chap 11.5 Plan Risk Response

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Chap 11.5 Plan Risk Response