After we have identified and analysed the risks, we know where to focus our efforts. The output from the analysis provides a ranked risk register with the risks of greatest significance to project objectives determined. Apt response actions to significant risks must be cost-effective and realistic.

Critical risks must be met with vigorous response actions; lower-ranking risks should receive response actions commensurate with their significance.

Documentation of Response Actions

Document the response action by describing the action, which work activities it will affect, and the cost of the response action. Identify the person(s) responsible for successful implementation of the response action. Also, consider the time impacts of the response action and how the risk response may affect the overall project and/or other risks

Planning Risk Response Actions

Select a response action – The project manager determines how to respond to each risk. The action selected is influenced by the level of the risk. Consider Exhibit 5-1:

Notes

General

·         For risks with a very high probability, consideration should be given to including this estimated cost in the base.

·         The power of risk management is realized when response actions are implemente

Threat Risks

1. Threat risks that have an estimated high impact and low probability can create enormous havoc for a project. These types of risks are frequently neglected when it comes to project risk management—but they deserve our attention. A high-impact risk with a low probability may have a moderate “expected value” for ranking purposes, but it is much more important than the ranking might reveal. It is these types of risks that we read about in the news because they are not given the aggressive risk response they merit. Pay attention to these risks!

2. Do not underestimate threats and the need to respond.

3. Most people pay attention to high-impact risks with high probabilities— as is appropriate.

 4. Insignificant risks do not belong on the risk register and minor risks may be aggregated or put on a list of things to “look out for.”

Opportunity Risks

1. Take advantage of all opportunities where you can do so in a cost-effective manner.

2. Do not overestimate the opportunities and do not ignore “low-hanging fruit.”