Differentiating Risk Response Strategies
Question
David is the project manager of HRC project.
He concluded while HRC project is in process that if he adopts e-commerce, his project can be more fruitful.
But he did not engage in electronic commerce (e-commerce) so that he would escape from risk associated with that line of business.
What type of risk response had he adopted?
Answers
Explanations
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A. B. C. D.B.
As David did not engage in e-commerce in order to avoid risk, hence he is following risk avoidance strategy.
David has adopted the risk response of avoidance by deciding not to engage in e-commerce in his HRC project.
Risk avoidance involves identifying a risk and taking action to eliminate the risk entirely, usually by changing the project plan or avoiding the activity altogether. In this case, David has identified the potential benefits of adopting e-commerce for his project but has chosen not to engage in it to avoid the risks associated with that line of business.
By avoiding the risk associated with e-commerce, David is not exposing his project to potential negative consequences that could result from engaging in that activity. Instead, he has chosen to stick to the current project plan and avoid any potential disruptions that could be caused by introducing a new line of business.
The other risk response options mentioned are:
- Acceptance: Accepting the risk means acknowledging that the risk exists and choosing to tolerate it without taking any action to mitigate its impact. This response is appropriate when the potential impact of the risk is low, and the cost of mitigating the risk is too high.
- Exploit: Exploiting the risk involves taking action to increase the likelihood or impact of a positive risk. This response is appropriate when the potential benefits of the risk outweigh the potential negative consequences.
- Enhance: Enhancing the risk involves taking action to increase the likelihood or impact of a positive risk while also taking steps to mitigate the negative consequences. This response is appropriate when the potential benefits of the risk outweigh the potential negative consequences, but the impact of the negative consequences needs to be reduced.
In summary, David has adopted the risk response of avoidance by choosing not to engage in e-commerce for his HRC project to avoid potential risks associated with that line of business.
