The Most Appropriate Response to Risk in Project Management
Question
You are the project manager of your enterprise.
You have identified several risks.
Which of the following responses to risk is considered the MOST appropriate?
Answers
Explanations
Click on the arrows to vote for the correct answer
A. B. C. D.A.
The appropriate response to the risk is decided by the risk itself, the company's attitude and appetite of risk, and the threat and opportunity combination of the risk.
Incorrect Answers: B, C, D: Depending upon the condition, that is, the risk itself, the company's attitude and appetite of risk, and the threat and opportunity combination of the risk, these response options can be chosen.
As a project manager, it is important to identify risks and develop appropriate responses to mitigate their impact. The four common responses to risk are: avoid, transfer, mitigate and accept.
A. "Any of the above" is not a valid answer as it doesn't provide a clear strategy or direction in terms of how to manage the identified risks.
B. "Insuring" is a type of risk transfer strategy where the risk is shifted to an insurance company. However, this is not always the most appropriate response to risk, as not all risks can be insured against. It is also important to note that insurance does not necessarily eliminate the risk, but rather mitigates the financial impact of the risk.
C. "Avoiding" is a strategy where the project team takes actions to eliminate the risk altogether. This is the most appropriate response when the risk is deemed unacceptable and can have significant negative consequences on the project's objectives. However, avoidance is not always possible or practical.
D. "Accepting" is a strategy where the project team recognizes the risk and decides not to take any action. This is a viable response when the risk is low, the cost of mitigation is higher than the potential impact of the risk, or when the project team has no other alternative.
Therefore, the most appropriate response to risk will depend on the specific risk, its likelihood, potential impact, and available resources. However, in general, avoiding the risk is the most appropriate response when possible, followed by transferring the risk or mitigating the risk. Accepting the risk should only be done when the potential impact is low and the cost of mitigation is not justified.
