Risk Mitigants Examples (With 5 Common Strategies)
By Indeed Editorial Team
Published May 8, 2022
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Project managers have a multitude of considerations when planning a project. One significant area they plan for is how to handle unexpected situations, risks, and liabilities through mitigation. Learning about risk mitigation can help you better manage your next project by understanding how to handle different liabilities. In this article, we discuss the definition of risk mitigation, identify various risk mitigants' examples, and highlight the five steps to creating a risk mitigation plan.
What is risk mitigation?
Risk mitigation reduces the effect of specific factors that can affect a project's completion. When planning and implementing a project plan, the project manager or team identifies risks, threats, and potential uncertainties. Doing so can minimize or eliminate these factors that can cause a project to cost more money, take longer to complete, or affect performance and productivity.
Risk mitigants examples
There are many risk mitigants examples available to show the strategy for minimizing project risks. When working in project management, you can use five standard strategies to reduce or eliminate risks. Below are the five methods with several examples of risk mitigation for each:
1. Assume and accept the risk
The first strategy for mitigating project risks is to assume and accept the risks involved. The acceptance strategy requires collaboration between all project team members to identify the potential risks associated with the project. Team members share their thoughts about possible setbacks or challenges and together determine if the consequences of the risks are acceptable.
In this strategy, team members also acknowledge and assume the liability that risks can present throughout the project. For example, a project manager may use this mitigation strategy for issues that can influence the project's output. As a result, it recognizes the risks so that everyone on the team knows the challenges and potential repercussions.
Risk of change in exchange rates example
An example of assuming and accepting risk regarding a potential project scenario is a change in exchange rates. For those companies who purchase materials, ingredients, or commodities from outside of Canada, there is the risk that currency exchange rates fluctuate throughout the life of the project. As a project manager, you can acknowledge this risk and choose to accept it. To mitigate the risk, you can employ strategies, such as making large purchases of required raw materials when the exchange rate is favourable or making payments to out-of-country suppliers or labour when the rate is more affordable.
2. Avoidance of risk
Avoidance of risk strategy builds on the uncertainties of the project and identifies ways to avoid these accepted risks. Using collaboration between the project team, a project manager can plan for any risks and take active steps to prevent them. For example, a project team may test a new product before final production to avoid product failure.
Testing the product before mass production allows the team to identify and correct any issues and avoid risk. Another example of avoidance is when a project team predicts expected costs, in addition to all possible expenses that could come up. Doing so adds padding to the project costs, avoiding the risk of going over the set budget.
Risk of health and safety example
Health and safety is an example of using risk avoidance as a mitigation strategy. As a project manager, you can identify that the health and safety of the project team are paramount to the project's completion. As a result, you can avoid the risk by providing resources for the team, such as a first-aid facility at the project site, in-depth safety training and certification for machinery users, and daily safety meetings with all team members to emphasize workplace health and safety. In addition, taking action ahead of the potential risks allows the team to avoid certain risk factors.
3. Controlling risk
Controlling risk as a project risk mitigation strategy means taking any risks into account and creating actions to reduce the effects. When a project manager implements risk control, it often requires accurate tracking of costs, labour, and resources. For example, a team may identify risks associated with budgeting for a project. In recognizing these risks, they can employ specific control measures, such as decision-making processes and financial management.
Through transparent communication and reporting, the team can identify issues before they arise by understanding how project funds funnel to various parts of the project and if there's a risk of going over budget. By putting control measures in place, the project team can change aspects of the project to reduce spending or eliminate a resource that's too costly.
Risk of loss of control over team priorities example
An example of controlling risk as a mitigation strategy is regarding the loss of control over team members' priorities. It's common for project teams to include company employees who have their primary work duties in addition to project tasks. This can often lead to a loss of control over an employee's priorities. When this happens, the result can include a frustrated employee, loss of productivity, and conflicting direction from multiple managers. To mitigate this risk through a controlling strategy, the project manager can ensure that all company leadership is aware of the project's importance.
Open communication between departments and project management can help control conflicting priorities and provide a transparent chain of command for the employee. Other controlling measures include involving department managers in decision-making for staff priorities, involving them in project meetings, and having an open calendar for shared employees.
4. Transference of risk
When a project team uses a transference strategy, they place the risk and consequences on another party involved with the project. This strategy requires the other party, upon mutual agreement, to accept certain risks. For example, suppose that a project team is building a new product. During production, the team identifies particular defects that affect the item's effectiveness.
The defects are not a direct result of production or planning. Instead, the flaws are from the raw materials purchased from an outside vendor. In this example, the project team may transfer the risk to the external vendor and work together to come to a solution.
Risk of quality control example
An example of using transference of risk as a mitigation strategy is quality control. As a project manager, you identify quality control early in the planning process as a potential risk. You decide to transfer the liability to a third party to mitigate this risk. For example, suppose your project requires particular checkpoints throughout the construction of a building. In that case, you can use building inspectors, welding inspectors, or other regulatory bodies to check for compliance with building standards.
This transfers the risk and liability to the third-party inspectors instead of individuals on the project team. As a result, the project team can continue their work while the inspectors address the defects.
5. Watch and monitor risk
The last risk mitigation strategy is to watch and monitor for risks throughout the project. The project team may decide to monitor the process through regular reporting, updating schedules, and keeping budget figures current. During a project, costs, scheduling, and performance or productivity are aspects that the team can monitor for risks.
There are several tools that project teams can use to monitor risk in various areas. For example, computer software programs offer project management tools, calendars, budgeting programs, and productivity efforts. These options allow project teams to monitor a project's progress and identify areas of opportunity.
Risk of unplanned work example
An example of using watching and monitoring to mitigate risk is unplanned work. When planning the tasks of a project, you identify the goals and then break them down into individual activities. There are two ways that unexpected work can occur. First, the project manager may not identify tasks requiring completion. The second way is changing the project scope or unforeseen additional work.
In either instance, you want to watch and monitor the unplanned work. To mitigate this risk, you can schedule project meetings to analyze the progress of team members' tasks. You can also review all project plans to ensure you've documented tasks adequately.
5 steps to create a risk mitigation plan
Risks are part of project planning, so here are five steps to creating a risk mitigation plan for your next venture:
Identify the risks. Brainstorm and identify all risks associated with the project.
Perform a risk assessment. Determine the chance of each scenario happening and the potential consequences.
Prioritize the risks. Identify which risks are most likely to happen and have the most severe impact on the project's success.
Track the risks. Create a way to track potential risks to gather information to make a mitigation plan.
Monitor the plan's progress. Once you've implemented a mitigation plan, continue to monitor the risks and make adjustments as necessary.
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