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4.2Selecting risk response strategies
Covers the four threat response strategies (avoid, transfer, mitigate, accept) for negative-impact risks and the four opportunity response strategies (exploit, share, enhance, accept) for positive-impact risks, building judgment for choosing among them based on cost-effectiveness, alongside secondary risk created by a response, residual risk remaining after a response, and contingency plans for unforeseen events.
Once risk analysis is complete, the PM's work is not done. What comes next is choosing the optimal response strategy according to each risk's nature (probability, impact, response cost), and anticipating whether that response creates new risk or how to handle risk that remains after the response. Threats and opportunities call for strategies pointed in opposite directions to begin with, and even the same-sounding idea of "reducing" a risk means something different for a threat versus an opportunity (enhancing it). This section covers choosing among response strategies with cost-effectiveness as the central judgment axis, and preparing for the secondary risk a response can introduce.
4.2.1The four threat response strategies
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