HKSM
Strategies for overall project risk
A set of response options applied to the project as a whole to shape aggregate uncertainty and its effect on objectives. Typical choices include avoid, exploit, transfer or share, mitigate or enhance, and accept, selected to reduce downside, increase upside, or both.
Key Points
- Overall project risk concerns total uncertainty about project outcomes, not a single risk event.
- Strategies act at the project level by changing objectives, approach, scope, delivery strategy, or governance.
- Common choices: avoid, exploit, transfer or share, mitigate or enhance, and accept.
- Selection should align with risk appetite, thresholds, and business case value.
- Decisions may require change control, funding for reserves, or executive sponsorship.
- Strategy effectiveness is monitored via trend indicators in the risk report.
Purpose of Analysis
To evaluate overall risk exposure and choose a project-level strategy that best aligns uncertainty with desired outcomes, balancing threats and opportunities within organizational risk appetite.
Method Steps
- Assess current overall risk exposure using qualitative and quantitative indicators (e.g., risk score trends, range of cost and schedule outcomes).
- Confirm organizational risk appetite and thresholds for key objectives.
- Identify feasible strategies: avoid, exploit, transfer or share, mitigate or enhance, and accept.
- Develop high-level actions for each candidate strategy (e.g., scope change, delivery approach, partnerships, reserves).
- Evaluate impact, feasibility, cost, and time implications; compare to thresholds and business case.
- Select the preferred strategy or combination; obtain governance approval and required funding.
- Update plans, baselines, and reserves; implement actions and assign ownership.
- Monitor exposure metrics and adjust strategy if indicators trend outside limits.
Inputs Needed
- Project charter and business case.
- Risk management plan, risk register, and risk report.
- Assumptions and constraints log.
- Stakeholder register and risk appetite statements.
- Cost and schedule estimates, including uncertainty ranges.
- Delivery approach and governance guidelines.
- Historical data and lessons learned.
Outputs Produced
- Selected overall risk strategy with rationale.
- Updated risk report and risk response plan.
- Requests for reserves or rebaselining through change control.
- Updated plans and delivery approach (scope, schedule, procurement, communications).
- Assigned owners for strategy actions and monitoring indicators.
Interpretation Tips
- Use trends, not a single data point; sustained increase in exposure warrants stronger strategies.
- Map strategies to appetite: if exposure exceeds thresholds, consider avoid or mitigate; if below, consider accept or exploit.
- Overall strategies can combine with individual risk responses; they do not replace them.
- Prefer strategies that improve value-to-risk ratio, not only those that lower risk.
- Secure stakeholder alignment early, as overall strategies often change objectives or resources.
Example
A project shows high overall schedule risk due to aggressive milestones and supplier uncertainty. The team evaluates options and selects a combined strategy: mitigate by moving to phased delivery, share by partnering with a proven supplier on critical components, and accept residual risk with added time reserves. Governance approves revised milestones and contingency. Exposure trends decline to within thresholds.
Pitfalls
- Confusing overall project risk with a list of individual risks.
- Adding contingency without considering structural changes to scope or approach.
- Choosing a strategy that conflicts with stakeholder risk appetite.
- Skipping governance approval for changes that alter objectives or baselines.
- Failing to monitor indicators and adjust when exposure drifts.
PMP Example Question
A project’s risk report shows overall risk exposure above the organization’s thresholds. What should the project manager do first?
- Implement individual risk mitigation actions immediately.
- Select an overall strategy such as avoid or mitigate and seek governance approval.
- Add schedule and cost reserves without changing the plan.
- Escalate all high-priority risks to the sponsor.
Correct Answer: B — Select an overall strategy such as avoid or mitigate and seek governance approval.
Explanation: When overall exposure exceeds thresholds, choose and propose a project-level strategy aligned with appetite; this often needs governance approval before implementation.
