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Well, the answers and also their justifications are as follows.
1. Avoid. “I drop the plans to drive much to wifey’s dismay and decide to take the bus instead”. This is a classic case of avoid. I know there is a risk in me driving, I decide to not to drive at all. Since I am not at the wheel, there is no risk of me causing an accident.
You would avoid a risk if the impact is significant and there is not much that you can do.
2. Mitigate. “Wifey gets airbags retrofitted”. This would be an example of mitigation where you have brought down the impact of the risk to a level that you consider to be safe. With air bags in place, even if an accident were to occur, the impact on the vehicle occupants would be significantly less.
You would mitigate the risk if the risk is amenable to cause and effect analysis. If the risk is a “black box”, mitigation may not be the strategy of choice.
3. Transfer. “Insurance policies are in right order”. Taking insurance is an example of risk transfer. If you were to get into an accident, the insurance company would bear your hospitalization expenses. The probability of the risk does not change. Nor does the impact.
You would transfer a risk, if mitigation is not possible. And there is someone who is prepared to underwrite the risk. You may have to pay a premium for risk transfer.
4. Accept. “I cannot get much leave from my office. I decide to drive during night to save time”. You have decided to throw caution to the wind and drive during the night. You will decide the course of action if and when an accident takes place.
You would accept a risk if there is no other option.
Mukund Toro is an independent Project Management Consultant who has worked with more than 1000 project managers. His 20+ years’ industry experience in software and telecommunication includes working in various capacities from project manager to director across multinationals, product and service companies and government research organisations.