Responses to Risk
Among the potential risks that have been identified is the failure to acquire licenses and permits on time, which is likely to lead to increased project timelines. This has been rated as a medium risk in case it is left unchecked. An appropriate response to this risk will be to reduce the risk. This response requires action to be taken to minimize either the likelihood of a risk occurring or the impact that the risk will have. This requires appropriate leadership from the project and team leader to ensure that they liaise with the responsible government officers and agencies to attain the required compliance. It is also important to understand all the requirements for the project to be able to acquire the necessary licenses and permits.
The other risk that has been identified is wrong inventory level, which is likely to cause an issue of either over-or under-stocking. The risk is rated as a high risk. An ideal response to this risk will be risk avoidance, which seeks to eliminate the uncertainty. This may be dealt with by directly clarifying requirements, acquiring information, and improving communication for the management (Hillson, 1999). The management may adopt the strategy on establishing re-order levels. In this case, the management will set the maximum order quantity and re-order level.
The potential risk of hiring the wrong staff that is likely to lead to poor human resource, exceeding budgets, and poor customer relations. The risk has been rated as a high risk when uncontrolled. An ideal risk response for the risk is risk avoidance. The management needs to put in place appropriate hiring and recruitment policies to ensure the recruitment of the right staff. There should be a training program for the staff to develop the skills relevant to their positions.
The appropriate response to the financial risk would be the mitigation of the risk. Mitigation involves reducing the size of the risk exposure to below the acceptable threshold (Bhoola, Hiremath, & Mallik, 2014). This may be achieved through measures to enhance the prudent use of financial resources. The controls and measures that may be necessary to achieve this include carrying out due diligence, subcontracting, and engaging in flexible contracts. It is also important to put in place effective budgeting process to avoid unplanned expenditures.
The risk of injury to employees can be responded to through risk transfers. Risk transfer involves shifting the risk to a third party. This can be achieved by acquiring an insurance cover to cater for the risk. The trade-off, in this case, will be the payment of premiums.
An appropriate response to communication risk is avoidance. This requires moves to eliminate the uncertainty. The risk is mainly caused by internal factors that the company may have control over. To achieve this, it will be important to establish proper communication channels that identify the levels of authority.
Poor project specifications are another risk that has been rated medium if it goes uncontrolled. This risk has been associated with possible effects such as poor standards of output and wrong organizational image. An appropriate response to this risk would be avoidance. This is because the organization has the ability to take control of most things leading to this risk. Avoidance of the poor project specifications risk may be achieved through the use of standard sheets and providing approved project specification documents.
Another major risk that needs to be considered is the environmental risk. An ideal response to this would be avoidance. This can be achieved through adhering to the legal and regulatory laws on environmental issues. The organization needs to develop an environmental mitigation plan that outlines how environmental related issues will be handled.
Bhoola, V., Hiremath, S. B., & Mallik, D. (2014). An assessment of risk response strategies practiced in software projects. Australasian Journal of Information Systems, 18(3).Hillson, D. (1999). Developing effective risk responses. In Proceedings of the 30th Annual Project Management Institute Seminars & Symposium (pp. 10-16).
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