A program manager identifies a risk with a potentially high impact on a key benefit. After analysis, the team concludes that avoiding the risk entirely would require sacrificing a major program objective, and transferring the risk is not cost-effective. Which of the following actions represents the most suitable risk response strategy?
Purchase insurance to cover the potential financial losses from the risk event.
Implement actions to reduce the probability and/or impact of the risk to a level within the program's risk threshold.
Proceed with program activities and address the risk's consequences only if the event occurs.
Modify the program management plan to remove the associated benefit and program objective.
The correct answer is to implement actions to reduce the risk's probability or impact. This strategy is known as mitigation. It is the most appropriate response when a risk cannot be feasibly avoided or transferred but is too significant to simply accept without action. Passively accepting a high-impact risk is not prudent. Modifying the plan to remove the benefit is a form of avoidance, which the scenario deems undesirable. Purchasing insurance is a form of transfer, which was determined not to be cost-effective.
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PgMP
Program Life Cycle Management
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