Risk Mitigation

website:https://www.nap.edu/read/11183/chapter/7#50

This article discusses the importance of risk mitigation planning and the value of particular approaches to reducing or mitigating project risks. The article demonstrated more illustrations and examples in explaining the risk mitigation process, than they utilized words. I learned that although risk mitigation plans may be developed in detail and executed by contractors, the owner’s program and project management should develop standards for a consistent risk mitigation planning process. How so? One strategy is called ‘risk allocation.’ Risk allocation without quantitative risk assessment can lead to attempts by all project participants to shift the responsibility for risks to others, instead of searching for an optimal allocation based on mutually recognized risks. Another strategy includes ‘risk avoidance.’ Risk avoidance is the elimination or avoidance of some risk, or class of risks, by changing the parameters of the project. Risk avoidance is probably underutilized as a strategy for risk mitigation, whereas risk transfer is overutilized. If a project is about developing a new product, and competition presents a risk, then one solution might be to accelerate the project, even at some considerable cost, to reduce market risk by beating the competition to market; this is a typical strategy in high-technology industries. The objective of risk mitigation is to create strategies that could otherwise reduce the probability and/or impact of an adverse risk.