Risk Response

Risk Response

Risk Response Jonathan Poland

Risk response is the process of addressing identified risks in order to control or mitigate their impact. It is an integral step in the risk management process and involves making decisions about how to address each identified risk. This planning and decision-making process involves stakeholders deciding on the most appropriate course of action for each risk.

Risk response can involve taking steps to eliminate the risk, reduce its likelihood or impact, transfer the risk to another party, or accept the risk. The chosen response should be based on an assessment of the potential costs and benefits of each option, as well as the organization’s risk tolerance and capacity. By effectively responding to identified risks, organizations can minimize the impact of potential negative events and maximize their chances of success. The following are the basic types of risk response.

Avoid
Change your strategy or plans to avoid the risk.

Mitigate
Take action to reduce the risk. For example, work procedures and equipment designed to reduce workplace safety risks.

Transfer
Transfer the risk to a third party. For example, purchase fire insurance for an unfinished building.

Accept
Decide to take the risk. Generally speaking, all strategies and plans involve some level of risk. Risk also has a relationship with reward whereby reducing risk towards zero can also reduce potential payback.

Share
Distributing the risk across multiple partners, teams or projects. For example, four projects each have a software architect and each identifies the risk that the software architect is a critical resource. They decide to share the risk by pooling the software architects into a team that provides a service to all four projects. If one architect quits, the service can be continued.

Contingency
Making plans to handle the risk if it occurs. For example, back-out procedures that can restore a system if a launch fails.

Enhance
Enhancement is a response for a positive risk. Project management methodologies may view finishing a task early or under budget as a positive risk. Enhancement is an action that is taken to increase the chance of the risk occurring.

Exploit
Another treatment for positive risks. Exploiting a risk is to make use of resources that become available if the risk occurs. For example, if a task finishes early, you plan to reassign the resource to more work.

Learn More
What is Cultural Fit? Jonathan Poland

What is Cultural Fit?

Culture fit refers to the compatibility of a candidate’s attitudes and experiences with an organization’s culture. It is a hiring…

Supply Risk Jonathan Poland

Supply Risk

Supply risk refers to the likelihood that a disruption in the supply of goods or services will negatively impact a…

Joint Ventures Jonathan Poland

Joint Ventures

A joint venture is a business venture or partnership between two or more parties. It is a collaborative effort in…

Serviceable Market Jonathan Poland

Serviceable Market

Serviceable market is the part of the total addressable market that can actually be reached.

Product Management Jonathan Poland

Product Management

Product management is the practice of managing a portfolio of products throughout their lifecycle from concept to end-of-life. It can…

What is Greenwashing? Jonathan Poland

What is Greenwashing?

Greenwashing refers to the act of making false or misleading claims about the environmental benefits of a product or company…

Feasibility Analysis Jonathan Poland

Feasibility Analysis

Feasibility analysis is the process of evaluating the potential of a proposed project or system to determine whether it is…

Market Value Jonathan Poland

Market Value

The value of an asset or good in a competitive market, where buyers and sellers can freely participate, is known…

Types of Work Jonathan Poland

Types of Work

Work refers to any productive activity or pursuit that is undertaken in order to create value. There are countless types…

Content Database

Search over 1,000 posts on topics across
business, finance, and capital markets.

Relationship marketing Jonathan Poland

Relationship marketing

Relationship marketing is a type of marketing that focuses on building long-term, mutually beneficial relationships with customers, rather than just…

Examples of Transparency Jonathan Poland

Examples of Transparency

Transparency refers to the practice of openly and honestly disclosing information to stakeholders within an organization, such as the public,…

What is a Superior Good? Jonathan Poland

What is a Superior Good?

A superior good is a type of good that tends to see an increase in demand as income levels rise.…

IT Governance Jonathan Poland

IT Governance

IT Governance refers to the way in which an organization’s executive leadership manages and directs information technology. It is a…

Serviceable Market Jonathan Poland

Serviceable Market

Serviceable market is the part of the total addressable market that can actually be reached.

Environmental Issues Jonathan Poland

Environmental Issues

Human activities have caused many environmental problems that are harmful to ecosystems, quality of life, and health. These issues have…

Time to Volume Jonathan Poland

Time to Volume

Time to volume is a marketing metric that measures the time it takes for a new product to go from concept to launch and reach a significant level of sales or usage.

Positive Risk Jonathan Poland

Positive Risk

Positive risk refers to the potential for achieving an outcome that is too good. While risk is often associated with…

Sales Planning Jonathan Poland

Sales Planning

Sales planning is the process of setting revenue and unit targets for a sales team, and developing a plan to…