Not all risk is created equally, as Jennifer Bridges, PMP, shows in this tutorial video. Learn the differences between positive and negative risk in projects and how to create action plans for each.
Here’s a shot of the whiteboard for your reference!
In Review: Positive vs. Negative Risks on Projects
Jennifer defined risk as an uncertain event or condition that can can have either a positive or negative impact on project objectives. Sure, some risks could, if they arise, have disastrous impacts to the project. But some risks actually open up unseen opportunities. For example, a positive risk might be that your servers crashed because demand suddenly spiked for your project. That’s a good problem to have.
Therefore, risk itself is not necessarily a bad thing. Just that as a project manager, you must be aware of each type of risk and develop a plan of action accordingly. Follow these strategies for positive and negative risks and work with your team to define a response for each.
Some of the strategies to deal with negative risk on your projects include:
- Avoid and try to eliminate the threat and protect the project from its impact.
- Transfer the impact of the thread to a 3rd party and own the response together.
- Mitigate the likelihood of occurrence or impact.
- Accept the risk and take no action until and unless it occurs.
Some of the strategies to deal with positive risk on your projects include:
- Exploit the opportunity and make sure its value is realized.
- Enhance the risk by increasing the likelihood of its impact.
- Share by allocating the responsibility to a 3rd party who can increase likelihood of capturing the opportunity.
- Accept opportunity if it arises, but don’t take proactive approach to make it happen.
See, risk doesn’t have to be a project evil. It’s just another aspect of the project you have to manage and steer to your advantage.
Pro-Tip: Rather than keep your risk planning on a document stored on file in a dusty cloud or desktop folder, think about keeping your risk planning right with your project. Online project management software allows you to record risks and the action plans you intend to take with them directly within the project. That way you can easily allocate an owner to specific risks, note the date when the risk first appeared and monitor the followup actions. You can see your risks at-a-glance on the dashboard, as well as generate reports on them.
Take it further: Read Elizabeth Harrin’s article to learn more about positive risks.
Thanks for watching!
Well, today, we’re talking about positive versus negative risks on projects. But first, we want to talk about what a risk really is. A risk is an uncertain event or condition that, if it does occur, can present a positive or a negative effect on one or more of the project objectives.
So think about if a positive effect on a project would be what we consider an opportunity. A negative effect on the project would be considered a threat. So think of opportunities could be too much of a good thing on a project and a threat being too much of a bad thing.
What’s an example of these? An opportunity on a project, think of possibly a marketing campaign for your company. So you do a marketing campaign, and the campaign ends up being more successful than the project had planned for. So you have to ask questions like, “What happens if we get more customers, more subscribers? What happens if we increase the demand, and how are we gonna handle that? Do we have the logistics into place for the shipping?”
A negative threat would be, what happens if you have a campaign, and you had the orders, and something happens to the shipping? Maybe the trucks or the transportation. Something happens with the transportation, so that could be a threat to that marketing campaign.
Let’s talk about some of the strategies that we would use to handle the opportunities and the threats on our project. We look at the risk, and let’s take the negative effects first. What are the strategies for those negative impacts, or negative risks, on our projects?
First of all, we may choose to avoid the risk, and what that means is we want to eliminate it totally, just make sure we don’t incur that risk on our project. So we want to eliminate the threat and protect against the impact.
We may choose to transfer the risk to a third party, together with the responsibility or ownership of that risk. Think of an insurance policy, where you’re actually having to pay a premium for someone to take that risk on.
We also may choose to mitigate the risk, and what that means is we’re trying to reduce the probability or the impact of that risk.
And the fourth one is we may choose to accept it. And what that means is we acknowledge the risk, and we’re not really going to take any action, unless that risk occurs.
Let’s take a look at the positive risks that may happen on our project and some strategies for those. First of all, we may choose to exploit that risk, meaning we want to ensure the opportunity is realized. If it happens, we’re going to seize the moment.
We may choose to enhance it, meaning we want to increase the probability and the impact of the opportunity.
We may choose to share it. And in this case, for the positive risk, when we share, it means we allocate some of the ownership and responsibility to a third party. So that may be more like a partnership, where we partner with a company or firm, where we’re leveraging their expertise for a certain thing.
And then the fourth one is we may choose to accept that risk, meaning we’re willing to take advantage of the risk, if it occurs, but we’re not going to actually pursue it, otherwise. This is the difference between the positive and negative risks on projects and some of the strategies.
If you need a tool that can help you with your positive and negative risks, then sign up for our software now at ProjectManager.com.