How do you respond to high-impact risks?

1 Identify high-impact risks

The first step in responding to high-impact risks is to identify them as early as possible. You can use various tools and techniques to perform risk identification, such as brainstorming, interviews, checklists, SWOT analysis, or expert judgment. You should involve your project team, sponsors, customers, and other relevant stakeholders in this process to get a comprehensive and realistic view of the potential threats and opportunities. You should also review your project scope, schedule, budget, quality, and other constraints to identify the sources and triggers of high-impact risks.

2 Analyze high-impact risks

The next step is to analyze the high-impact risks to determine their likelihood and impact on your project objectives. You can use qualitative or quantitative methods to perform risk analysis, depending on the availability and reliability of data and information. Qualitative methods involve ranking and rating the risks based on their probability and severity, using scales such as low, medium, or high. Quantitative methods involve using numerical data and statistical techniques to estimate the probability and impact of the risks, such as expected value, sensitivity analysis, or Monte Carlo simulation.

3 Plan high-impact risk responses

The third step is to plan how to deal with the high-impact risks, based on the results of your risk analysis. You can choose from four risk response strategies: avoid, transfer, mitigate, or accept. Avoidance means changing your project plan or scope to eliminate the risk or its cause. Transfer means shifting the risk or its consequences to a third party, such as an insurance company, a contractor, or a supplier. Mitigation means reducing the probability or impact of the risk to an acceptable level, such as by implementing preventive or corrective actions. Acceptance means acknowledging the risk and its potential outcomes, and preparing a contingency plan or reserve to cope with it.

4 Implement and monitor high-impact risk responses

The final step is to implement your risk response plan and monitor its effectiveness and efficiency. You should assign roles and responsibilities for each risk response action, and communicate them clearly to your project team and stakeholders. You should also track and measure the progress and performance of your risk response actions, using indicators such as risk exposure, risk status, or risk deviation. You should also review and update your risk register and risk response plan regularly, to capture any changes or new information that may affect your high-impact risks or your project objectives.