You are the project manager for GHY Project and are working to create a risk response for a negative risk. You and the project team have identified the risk that the project may not complete on time, as required by the management, due to the creation of the user guide for the software you’re creating. You have elected to hire an external writer in order to satisfy the requirements and to alleviate the risk event. What type of risk response have you elected to use in this instance?
A.
Exploiting
B.
Transference
C.
Avoidance
D.
Sharing
Explanation:
This is an example of transference as you have transferred the risk to a third party. Transference almost always is done with a negative risk event and it usually requires a contractual relationship.
What is transference?
Transference is a strategy to mitigate negative risks or threats. In this strategy, consequences and the ownership of a risk is transferred to a third party. This strategy does not eliminate the risk but transfers responsibility of managing the risk to another party. Insurance is an example of transference.Answer option C is incorrect. When extra activities are introduced into the project to avoid the risk, this is an example of avoidance.
Answer option D is incorrect. Sharing is a positive risk response, such as receiving a discount for a purchase if the quantity, you’re purchasing,is large enough. In this instance, you might share the risk with another project that also needs the item you’re purchasing so you can both seize the opportunity. The sharing risk response can also describe a teaming agreement or short-term partnership between two entities to capture an opportunity.
Answer option A is incorrect. Exploiting is a positive risk response that takes advantage of an opportunity, such as selling a byproduct, an opportunity in a market window, or other risk that can be profitable, offer a time-savings, or reduce costs.
Reference: "A Guide to the Project Management Body of Knowledge, 4th Edition, ISBN: 978-1-933890-51-7.", "IT Project Management: On Track From Start to Finish by Joseph Phillips, ISBN: 978-0072232028."