What are valid strategies to deal with negative risks?

One of the given strategies is not a valid strategy to deal with negative risks. Which one is it?

One of the given strategies is not a valid strategy to deal with negative risks. Which one is it? Sophia is the technical lead in a project for an energy company. She was involved in all the 7 processes in project risk management. She was developing a risk register and risk reports to submit to the higher authorities in the organization. When a negative risk happens usually it will increase the cost or delay the schedule when the positive risk happens, it will benefit the project by reducing the cost or by decreasing the duration of the project. One of the given strategies is not a valid strategy to deal with negative risks. Which one is it? A. Avoid. B. Mitigate. C. Transfer. D. Exploit. Answer: Option D is not a valid strategy. Valid strategies to deal with negative risks are; Avoid, Mitigate, Transfer, And Accept. Avoid: This is a suitable strategy for critical risks with high impact. Eliminate the root cause of risk in this strategy. This can be done by changing the project management plan to eliminate the threat. E.g.: removing a work package from the project, which is considered risky, reduce the scope or extend the schedule. Transfer: This is a suitable strategy for less critical risks with less impact. This strategy makes someone responsible for the risks and the responses. Transfer does not eliminate the risks completely. Contracts can be used to transfer liability of risks to the 3 rd party. e.g.: by purchasing insurance, warranty for the product. Mitigate: This is a suitable strategy for critical risks with high impact. This strategy reduces the probability of occurrence or impact of the threat. This strategy helps to maintain the risks within the threshold levels defined. E.g.: more testing, avoid complex processes, etc. Accept: This is a suitable strategy for less critical risks with less impact. Sometimes it is not possible to eliminate all the risks in the project. Also the cost to avoid or mitigate or transfer the risk to the 3 rd party is very high. In such scenarios, acceptance is the best option, and the project management plan is not changed in this strategy. This can be used for both threats as well as opportunities. Acceptance can be active or passive. Active acceptance is to establish a contingency reserve to deal with the threats. Passive acceptance requires no action.

Sophia is the technical lead in a project for an energy company. She was involved in all the 7 processes in project risk management. She was developing a risk register and risk reports to submit to the higher authorities in the organization. When a negative risk happens usually it will increase the cost or delay the schedule when the positive risk happens, it will benefit the project by reducing the cost or by decreasing the duration of the project. One of the given strategies is not a valid strategy to deal with negative risks. Which one is it?

A. Avoid.
B. Mitigate.
C. Transfer.
D. Exploit.

Answer: Option D is not a valid strategy.

Valid strategies to deal with negative risks are;

  • Avoid,
  • Mitigate,
  • Transfer,
  • And Accept.
  1. Avoid: This is a suitable strategy for critical risks with high impact. Eliminate the root cause of risk in this strategy. This can be done by changing the project management plan to eliminate the threat. E.g.: removing a work package from the project, which is considered risky, reduce the scope or extend the schedule.
  2. Transfer: This is a suitable strategy for less critical risks with less impact. This strategy makes someone responsible for the risks and the responses. Transfer does not eliminate the risks completely. Contracts can be used to transfer liability of risks to the 3 rd party. e.g.: by purchasing insurance, warranty for the product.
  3. Mitigate: This is a suitable strategy for critical risks with high impact. This strategy reduces the probability of occurrence or impact of the threat. This strategy helps to maintain the risks within the threshold levels defined. E.g.: more testing, avoid complex processes, etc.
  4. Accept: This is a suitable strategy for less critical risks with less impact. Sometimes it is not possible to eliminate all the risks in the project. Also the cost to avoid or mitigate or transfer the risk to the 3 rd party is very high. In such scenarios, acceptance is the best option, and the project management plan is not changed in this strategy. This can be used for both threats as well as opportunities. Acceptance can be active or passive. Active acceptance is to establish a contingency reserve to deal with the threats. Passive acceptance requires no action.
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