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Strategies for Threats and Strategies for Opportunities
Seeing the differences in strategy between Threats and Opportunities is important as this will definitely come up in your PMP exam, and being prepared for these in the real world will really help your career.
What do we mean by strategies for threats and opportunities? They are plans of action that are considered for dealing with risks, both negative and positive in a project. Opportunities being positive, and threats being negative.
Threats and Opportunities
Here are the broad differences and similarities between these two strategies that we’ll use for these particular risks.
Strategies for threats, we could escalate that threat. And it’s the same for opportunities, we might escalate that opportunity as well. We’ve also got Accept that threat, which is the same for opportunities as well.
Now the ones in between are different between the two approaches.
For threats we’ve got Avoiding the threat, Transferring the threat, and Mitigating that threat.
And strategies for opportunities we’ve got Exploiting that opportunity, Sharing that opportunity, and Enhancing the opportunity. Just remember Escalate and Accept are the same for threats and opportunities, or they’re both used for threats and opportunities, but the ones in between are different. Let’s look at them in a bit more detail.
Strategies for Dealing with Threats (Negative Risks)
There are five strategies considered for dealing with threats. Escalate, where we’re escalating that risk or proposed response to a higher level. And it’s the level that would be affected – for example the sponsor or an executive within the company that’s appropriate to escalate that risk to or the risk response to.
We might be Avoiding the risks, which is when we’re moving or changing the project objective to avoid the risk. We’re actually moving out of the way of that risk, maybe where we’re changing what we’re delivering because we just don’t want to be involved, we want to avoid it.
When we’re transferring a risk we might shift the ownership of a threat to a third party, for a price. For example that’s what insurance does. We pay a premium and that shifts the risk – maybe to the insurer instead of to us, and then they manage that risk and bear the impact if the threat occurs.
If we’re mitigating the risk, then we’re taking action to reduce the probability of the occurrence or the impact of that threat. So we’re using things like Prototyping, or more testing, or less complex processes to try and simplify things – we’re mitigating that occurrence, trying to reduce the probability of that threat occurring.
Lastly of course we’ve got Accept, and that’s where we simply acknowledge the existence of that threat but we don’t take any action. We just say “There it is.” Usually we do this for low impact or low probability risks, where it’s not going to bother us too much if it actually happens. We might say “Okay, we accept that that could happen.”
Strategies for Dealing with Opportunities (Positive Risk)
The five strategies considered for dealing with Opportunities – Escalate and Accept are the same. So we’ve got Escalate again when our opportunity is outside of the scope of the project, or would exceed the project managers authority, we might escalate that opportunity to a higher level.
If we want to exploit the opportunity, it might be selected for high priority. Opportunities that we come across in our project and the organization we might want to ensure that that opportunity is realized, so we’re exploiting the opportunity.
We might want to Share it as well, so that involves transferring the ownership of that opportunity to a third party so that it shares some of the benefit of the opportunity when the opportunity occurs. That might be within our organization or it might be to another organization or something similar.
If we’re Enhancing the opportunity, then it’s a strategy where we want to increase the probability or the impact of that opportunity occurring. We can focus attention on the causes of that opportunity and that way we can hopefully enhance it and take advantage of it.
Finally we might want to just Accept that an opportunity is there, so no proactive action is taken and this might be for low priority opportunities in the same way that we’ve got low priority threats, and we’re just taking no action for those as well.
And that is strategies for threats versus strategies for opportunities in your project.
– David McLachlan