Positive Risk Response

Quick reference

• 00:05 Hi, I'm Ray Sheen.
• 00:06 Let's talk about how to respond to a risk opportunity, what we call a Positive Risk.
• 00:13 The Project Management Body of Knowledge, the PMBOK Guide defines a risk opportunity
• 00:17 as a risk that would have a positive effect on one or more project objectives.
• 00:22 There are five strategies that we can use to address risk opportunities, escalate,
• 00:27 exploit, enhance, share, or accept.
• 00:30 Which approach you take will depend upon many factors associated with the project
• 00:33 and your business.
• 00:35 Things like the project type, the project phase, resources, the project size and
• 00:40 complexity, and management commitment.
• 00:42 Let's have a look at each of the five strategies that you can use to respond
• 00:46 to an opportunity risk.
• 00:48 The first response strategy is escalate.
• 00:50 That doesn't mean that that should be your first response.
• 00:54 Actually this is the last response if you aren't able to
• 00:56 take advantage using one of the other strategies.
• 00:59 This strategy leads to a change in the project goals or boundaries.
• 01:03 The magnitude of this opportunity is one that is beyond the authority of
• 01:06 the project team to address.
• 01:08 So they bring it to the stakeholders with the request to change the goal or
• 01:12 boundary.
• 01:13 One thing the stakeholder may choose to do is to add or subtract scope.
• 01:17 Another thing is to change the project schedule boundary,
• 01:20 like moving the project to a different fiscal year.
• 01:23 Or the stakeholders may change the project budget.
• 01:25 Adding, or moving money between capital funds and expense funds.
• 01:30 Keep in mind the stakeholders may also choose to add some different
• 01:33 people to the team.
• 01:34 The remaining four strategies are all strategies that the team can apply without
• 01:38 asking permission from the other stakeholders.
• 01:41 Because the rest of the techniques do not change the project boundaries.
• 01:46 Next is exploit.
• 01:47 Exploit refocuses the project onto the risk opportunity.
• 01:51 Elements of the project are changed so
• 01:53 as to ensure that the project is able to take advantage of the opportunity.
• 01:57 It's no longer an uncertain opportunity.
• 01:59 It's now built into the project plan.
• 02:02 You'll need to change something in the project for this to occur.
• 02:05 Typically, it is a task or activities,
• 02:07 not the deliverables that change to take advantage of the opportunity.
• 02:11 It may also be changes in some of the requirements that you are writing.
• 02:14 Part of them being under changed control, of course.
• 02:17 You may change the schedule moving task with different time period in order to
• 02:21 take advantage of the opportunity, or
• 02:23 you may change the resources assigned to the tasks as you find that resources
• 02:27 are available at different times than what was originally assumed.
• 02:31 The next strategy is to enhance the probability of the opportunity or
• 02:35 to enhance the impact that that opportunity would have on the project.
• 02:39 Unlike the exploit strategy there is still uncertainty.
• 02:42 But the changes that you make to the project plan in this case
• 02:45 are to better align the project with the nature of the opportunity so
• 02:49 that the project is positioned to take advantage if the opportunity occurs.
• 02:53 It might be to change the plan so as to stimulate the characteristics of this
• 02:57 opportunity which would increase its probability.
• 03:00 A great way to enhance a project for
• 03:02 its opportunity is to set up early warning signals that the opportunity is likely.
• 03:06 One of the problems with opportunity risks is that if they are recognized too late in
• 03:11 the project, the cost of the change can overwhelm the benefit of the opportunity.
• 03:15 But if that same risk were recognized earlier in the project,
• 03:19 a minor change could have been implemented that leveraged the opportunity.
• 03:23 Sharing is the next opportunity risk response strategy.
• 03:26 In this case another organization is brought in to assist on the project.
• 03:30 There assistance benefits one or more of the project objectives.
• 03:33 An outside partner may have resources or
• 03:35 capabilities to change a possible benefit into a guaranteed benefit.
• 03:40 Their participation on the project opens doors that were previously closed.
• 03:45 This partner's not free, they don't need to share the benefits for the project.
• 03:49 But often, the increased benefits can be divided between the two of you and
• 03:53 you are still better off than doing it alone.
• 03:56 This type of partnership will sometimes take the form of a joint venture on
• 03:59 the project.
• 04:00 Although this adds to project benefits, it can change how you have to plan and
• 04:04 manage the project.
• 04:05 And in fact, you may need to escalate to get approval to do this.
• 04:09 Another approach is a risk sharing partnership.
• 04:11 If you're considering going down these paths, bringing your corporate
• 04:14 lawyers to be certain that all the parties understand the obligations and benefits.
• 04:19 The final approach to positive risk response is just like the final approach
• 04:22 to negative risk response, it's the acceptance strategy.
• 04:26 If you've not done one of the other four strategies, you are using acceptance.
• 04:30 Again, the project remains unchanged with this strategy.
• 04:34 This strategy is often selected because the opportunity is so small but
• 04:38 the impact would be negligible.
• 04:40 Or the nature of the opportunity is so
• 04:42 uncertain, that you can't begin to anticipate it.
• 04:45 And as I mentioned with the acceptance strategy for
• 04:48 negative risk response, you should consider using a trigger for this that may
• 04:52 possibly have a significant impact if their likelihood is improved or assured.
• 04:59 Whichever approach you choose, positive risks are very real on most projects.
• 05:04 Seek them out early in your project planning and early project phases.
• 05:07 Taking advantage of positive risk improves the project's impact on both goals and
• 05:12 objectives.

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