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How to Deal with Threats and Opportunities
Isn’t it difficult to tackle certain situations when one wrong step can change the entire consequences? Yes, some situations make us dumbfound, and paralyze our decision-making capabilities whether that has a positive or negative impact on our project’s life. So, don’t you think that it is better to have some tools and techniques to deal with such threats and opportunities?
Irrespective of the project’s duration and intricacy, risks are always there and in the case of long-term complex projects, the level of risks increases manifolds. So, to minimize the negative impact on our projects, we should have a concrete plan with well-defined strategies to deal with the situations when it occurs. A risk response plan contains the strategies to reduce the threats coming on the way of the project, as well as helps the team to enhance the opportunities to avail maximum benefits out of it.
The process requires organizing the risks as per their priorities and then allocates resources, budget, and schedule as applicable to handle both the negative and positive risks.
Moving forward, let’s discuss some of the possible strategies to deal with the negative risks.
How to Approach Threats?
Typically there are three strategies to deal with the threats which can have negative impacts on our project. These are Transfer, Avoidance, Mitigate, and another one – Accept which can be used as a strategy to deal both the threats and opportunities.
Transfer the Threat
In the case of certain risks, where you know that it is not possible to manage when it actually occurs, it’s better to transfer those risks to a third party who can handle it better. Transferring does not mean that the risk is eliminated; you still own that, only the responsibilities will be transferred to a third party to manage that risk by paying the appropriate amount for the service.
For example, you want to setup a data center with some high-end servers as per your project’s requirement. But as you do not have the required skills in-house to set up the data center, you signed a fixed price contract with a contractor to do the work. Now it is the contractor’s responsibilities to setup the data center within the agreed cost and schedule.
Also, you can buy insurance by paying the required premium as per the cost of the data center to cover the losses in case of any mishaps.
Avoid the Threat
Another strategy is to avoid or eliminate threats and its impact on the project by changing the project plan, reduce or change the project scope or change the project schedule in such a way that the anticipated risk may not occur at its first place.
For example, during the project, some of your highly skilled team members will not be available at certain periods, so you can change the project plan to avoid any big releases at that period.
Accept the Threat
For certain threats, you cannot chalk out a strategy that may be because you do not have the required skills to deal with such threats or the solution to those threats demands much more than your budgeted cost. So, in that scenario, it is better to accept the risk either actively or passively. In the case of passive acceptance you need not do anything, just note down the threat.
Mitigate the Threat
This is a common risk response strategy where you need to plan the things in such a way that the impact or the probability of occurrence of the threats can be reduced to an acceptable limit when it actually occurs.
For example, when you know that one of your project milestones is falling on holiday seasons where most of your team members will be on leave, you plan to involve more resources to complete the milestone works just before the holidays for a successful release.
How to Leverage Opportunities?
Where it is necessary to reduce the impact of threats on the projects, it is also beneficial to leverage the opportunities coming on your way. Mainly there are four types of risk response strategies to deal with the risks which have positive impacts on the project objectives.
Enhance the Opportunities
This is a strategy to increase the probability of opportunities or the positive impacts to get the benefit.
For example, let’s assume completing a three months long milestone in 2 months can fetch a new project from the customer.
So, you can add more resources to get the work done in a shorter period and showcase the work to the customer to win another similar kind of project.
Exploit the Opportunities
In this strategy, you need to plan in such a way that the opportunity should be realized when it comes, make sure it should not go unrealized. For example, as we discussed above, you know that completing a major milestone can win a new project from the customer. So, you must use any of the crashing technique to complete it faster to win the opportunity.
Share the Opportunities
This strategy is to share the opportunity with another party who is more capable of capturing the opportunity for the benefit of the project. For example, due to lack of resources, you cannot bid for a big size construction project. So you can partner with another company who have the required resources to place the bid jointly to win the high-value contract. And yes, you need to share the benefits also with your partner when you won the contract.
Accept the Opportunities
The accepted strategy is simply to wait for the opportunity to happen and realize it when it happens but do not take any active actions on it. For example, if prices of certain raw materials go down due to any market conditions, then it will have a positive impact on your project budget. So, you will accept the benefit when it happens.
You cannot completely avoid the threats in your project. But at least you can reduce their impact and probable occurrences when you are ready with proper risk response strategies to deal with them. These strategies are not only capable you to deal with the threats but also gives an edge to realize the opportunities coming on the way, which is beneficial for you as well as your organisation.
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