Risk Management

Failed Risk Response Plan? Test Risk Appetite First

You have created a risk response plan, but do you know the risk appetite of your organization and stakeholders? Without understanding, you might be burdening projects with risks that you could have easily transferred somewhere else. If you ignore a risk, you might the lose opportunity for another busines case. In this article at the Practicing IT Project Manager, Dave Gordon shares questions to help you discover corporate risk appetite before you plan your responses.

Necessity of Testing Risk Appetite

Sometimes carefully laid out response strategies do not work due to internal changes or mergers and acquisitions. Though organizations are now ready to take some risks, they do not know how much they can tolerate. They have no clue how those risks would affect their short-term and long-term goals. So, here are the risk appetite questions you must have answers to before planning on something critical:

Having Clarity on Risk Tolerance:

You can call these as checkpoints to understand how mature your organization’s capacity is. Your willingness to take in more can increase the chances of advancing in the competition. Gordon has prepared a series of questions that will enable you to decide the factors affecting your risk appetite. Let’s find out here how tolerant you in accepting risks:

  • Are you willing to replace an established vendor with an acceptable level of performance in order to reduce costs?
  • Are you willing to accept higher retention risk after an implementation project is completed, in order to avoid the costs of augmenting your staff with temporary workers?
  • Are you willing to accept higher quality risk, in order to finish on schedule?
  • Are you willing to defer some deliverables in order to reduce schedule risk?
  • Are you willing to add administrative complexity, in order to reduce implementation risk?

To view the original article in full, visit the following link: http://blog.practicingitpm.com/2020/04/13/the-influence-of-risk-tolerance-on-risk-response-strategies/

Indrani Roy

Indrani Roy is currently working as a Content Specialist for CAI Info India. She has knowledge in writing blogs, product descriptions, brand information, and coming up with new marketing concepts. Indrani has also transcribed, subtitled, edited, and proofread various Hollywood movies, TV series, documentaries, etc., and performed audio fidelity checks. She started her career by articulating a knowledge base for an IT client, and, eventually, went on to create user manuals and generate content for a software dashboard. Writing being one of her passions, reading books is naturally her favorite pastime. When not lost in the world of letters, she is a foodie, movie buff, and a theater critic.

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