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Positive Risk Response is determining what actions the project will take to address risk opportunities.

Quick reference

Positive Risk Response

Positive Risk Response is determining what actions the project will take to address risk opportunities.

When to use

Once the risk analysis is complete (both qualitative and quantitative) risk response is prepared for appropriate risks.  Early in the project, there are often risk opportunities available to the project team.  As the project progresses, many times the negative cost and schedule impact of making the change is greater than the positive benefit.  Therefore, positive risk opportunities must be sought early in the project.

Whenever a risk changes priority, the risk response should be reassessed.

If a risk response has been implemented in the project plan, but it is later determined to be insufficient to accommodate the risk, additional risk response should be created.

Instructions

Definition

Risk Response:  “The process of developing options and actions to enhance opportunities and reduce threats to project objectives.” PMBOK® Guide

There are five approaches to Positive Risk Response.  The characteristics of the organization and unique features of the project will determine which approach to use.

Escalate

This approach is used when the opportunity would cause the project to operate outside the original charter boundaries or objectives.   This approach should be used if the other approaches are not able to take full advantage of the opportunity.  The stakeholders must approve the boundary change and then the team will need to replan the project.

Exploit

Change the project plan so that the risk will happen.  In this case the focus is on the likelihood aspect of the opportunity.  By changing the project plan the opportunity is no longer uncertain but becomes certain.  Some opportunities will always remain uncertain, but many can be built into the project. 

Enhance

This approach to an opportunity is to increase the likelihood of the impact or both.  This is often done by changing the resources or timing of an activity.

Share

This is often structured as a joint venture or some other type of risk-sharing partnership.   The organization that you are “sharing” with will enhance or enable the opportunity.

Accept

If you do not select one of the other approaches, you are selecting accept.  This approach is appropriate for very small or unlikely risks.

This definition is taken from the Glossary of the Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc., 2017.

Hints & tips

  • The responses can be combined in order to get a more effective response.
  • Before escalation, the project team should have attempted all of the other responses that they are able to implement.
  • When the risk rating changes, the response may need to change also.
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  • 00:01 Hi, I'm Ray Sheen.
  • 00:02 Let's talk about how to respond to a risk opportunity, what we call a positive risk.
  • 00:07 The Project Management Body of Knowledge, the PMBOK Guide,
  • 00:12 defines a risk opportunity as a risk that would have a positive effect on one or
  • 00:17 more project objectives.
  • 00:19 There are five strategies we can use to address risk opportunities,
  • 00:24 escalate, exploit, enhance, share, or accept.
  • 00:27 Which approach you use will depend upon many factors associated with
  • 00:31 the project and your business.
  • 00:34 Things like the project type, the project phase,
  • 00:37 resources, project size and complexity, and management commitment.
  • 00:42 Let's look at each of the five strategies that you can use for
  • 00:46 responding to an opportunity risk.
  • 00:48 The first response strategy I will mention is escalate.
  • 00:51 That doesn't mean that should be your first response.
  • 00:55 Actually, this is the last response if none of the others are able to take
  • 00:59 advantage of the risk.
  • 01:01 This strategy leads to a change in the project goals or boundaries.
  • 01:04 The magnitude of this opportunity is one that is beyond the authority of
  • 01:08 the project team to address.
  • 01:10 So they bring it to the stakeholders with the request to change the goal or
  • 01:14 boundaries.
  • 01:15 One thing the stakeholders may choose to do is to add or subtract scope.
  • 01:19 Another thing is to change the project schedule boundary,
  • 01:23 like moving the project to a different fiscal year.
  • 01:26 Or the stakeholders could change the project total budget, adding more money or
  • 01:30 moving between departments or phases.
  • 01:32 This can often include changing some of the team members.
  • 01:35 The remaining four strategies are all strategies that the team can apply without
  • 01:40 asking permission from the other stakeholders.
  • 01:42 Because the rest of the techniques do not change the project boundaries.
  • 01:47 One of these is exploit.
  • 01:49 Exploit refocuses the project onto the risk opportunity.
  • 01:52 Elements of the project are changed so
  • 01:55 as to ensure that the project is able to take advantage of that opportunity.
  • 02:00 It's no longer an uncertain opportunity, it is now built into the project plan and
  • 02:04 has become a certainty.
  • 02:06 You will need to change something in the project for this to occur.
  • 02:10 Typically, it is the tasks or activities, not the deliverables,
  • 02:13 that change to take advantage of the opportunity.
  • 02:16 It may also be a change to some of the requirements that you were writing prior
  • 02:20 to them being under change control.
  • 02:23 You may change the schedule, moving tasks to a different time period in order to
  • 02:27 take advantage of the opportunity.
  • 02:29 Or you may change the resources assigned to a task as you find
  • 02:32 that resources are available at different times than what was originally assumed.
  • 02:37 The next strategy is to enhance the probability of the opportunity or
  • 02:41 enhance the impact of that opportunity would have on the project.
  • 02:45 Unlike the exploit strategy, there is still uncertainty.
  • 02:47 But the change that you make to the project plan in this case are to
  • 02:51 better align the project with the nature of the opportunity so
  • 02:55 that the project is positioned to take advantage if the opportunity does occur.
  • 03:00 It might be to change the plan so as to stimulate the characteristics of
  • 03:04 the opportunity, which would increase its probability.
  • 03:07 A great way to enhance a project for an opportunity is to set up an early
  • 03:11 warning signal that the opportunity is pending.
  • 03:14 One of the problems with the opportunity risk is that they are often recognized
  • 03:19 too late in the project.
  • 03:20 The cost of the change can overwhelm the benefit of the opportunity.
  • 03:24 But if that same risk were recognized earlier in the project,
  • 03:28 a minor change could have been implemented that leverages the opportunity.
  • 03:33 Sharing is the next opportunity risk response strategy.
  • 03:36 In this case, another organization is brought in to assist on the project.
  • 03:41 Their assistance benefits one or more of the project objectives.
  • 03:45 An outside partner may have resources or
  • 03:47 capabilities to change a possible benefit into a guaranteed benefit.
  • 03:52 Their participation on the project opens doors that were previously closed.
  • 03:57 This partnership is not free,
  • 03:58 you will need to share the benefits from the project.
  • 04:01 But often the increased benefits can be divided between the two of you and
  • 04:06 you're still better off than doing it alone.
  • 04:09 This type of partnership will sometimes take the form of a joint
  • 04:13 venture on the project.
  • 04:14 Although this adds to the project benefits,
  • 04:17 it does change how you have to plan and manage portions of the project.
  • 04:21 You may need to escalate for approval to do this.
  • 04:24 Another approach is a risk sharing partnership.
  • 04:27 If you're considering going down this path, bring in your corporate lawyers to
  • 04:31 be certain that all parties understand the obligations and benefits.
  • 04:35 The final approach to positive risk response is just like the final approach
  • 04:39 of negative risk response, it is the acceptance strategy.
  • 04:42 If you've not done one of the other four strategies, escalate, exploit, enhance, or
  • 04:47 share, you are doing accept.
  • 04:49 Again, the project remains unchanged with this strategy.
  • 04:52 This strategy is often selected because either the opportunity is so
  • 04:56 small that its impact would be negligible, or the nature of the opportunity is so
  • 05:01 uncertain that you can't begin to anticipate it.
  • 05:04 And as I mentioned with the acceptance strategy for negative risk response,
  • 05:08 you should consider using a trigger for those that may possibly have a significant
  • 05:13 impact if their likelihood is improved or assured.
  • 05:16 Whichever approach you choose, positive risks are very real on most projects.
  • 05:21 Seek them out early in the project planning and early project phases.
  • 05:24 Taking advantage of positive risk improves
  • 05:30 the project's impact on both goals and objectives.

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