Risk reduction is the process of planning to reduce threats or risk related to project objectives. To reduce risk, the project team implements the steps of identification, monitoring, assessment of inherent risks and consequences.
Ways of Risk Reduction
1. Accepting risk
Acceptance strategy involves collaboration between team members who identify potential project risks. In addition to risk identification, team members can also identify risk vulnerabilities. This strategy is used to identify and understand the risks that play a significant role in the production of the project and its purpose is to help the members of the organization.
1.1.Accepting Cost-Effective Risks
1.2.Accepting Risks Affecting Timing
This strategy helps to identify potential risks that affect planning such as project follow-up.
1.3.Accepting Risks Affecting Performance
2. Risk Control
When reducing project risk, team members can implement control strategies.
2.1.Controlling the Risks Affecting the Cost
By implementing control, the project team can identify possible risks related to the project budget. Risk control includes focus on management, decision making process and finding fault in project budget. This strategy will help the project team on the method of disbursement. If the risk is underfunded, the team will identify this before it happens and take measures to control the risk, such as reducing costs or eliminating costly resources.
2.2.Risk Control Affecting the Schedule
The control methods include the necessary follow-up to do the work and the assignment of tasks to the team members according to the time of each task. The project team helps us with time management, control risk management in project planning.
2.3.Risk Control Affecting Performance
3. Risk Transfer
This strategy works by transferring risk pressure. The transfer strategy has its own drawbacks, and when implementing this risk reduction strategy, it must work in a way that is acceptable to all groups.
3.1.Transfer of Risks Affecting the Cost
The transfer of cost-related risks includes accountability of accountants and financial advisors in the field of budget issues. For example, a project with a specific budget includes higher production costs and material budgets. If their responsibility is transferred to the finance team responsible for tracking the budget, other team members and production managers can focus on their responsibility while the finance team takes the necessary steps to fix the cost problem.
3.2.Transfer of Risks Affecting Timing
When the project is taking too long, we can use the handover strategy to delegate the responsibility of the program to the time management team members. With the responsibility transferred to the planning team members, the production team and the design team can focus on the rest of their tasks.
3.3.Transfer of Risks Affecting Performance
If a team produces a new product but the final product has defects, these defects are not related to problems in the production process; Rather, it is related to the problems of the raw materials purchased from the distributor. The manufacturing company either decides to bear the consequences or hands over the responsibility of the situation to the foreign distributor who is responsible for the supply of the product’s raw materials and asks him to compensate the costs of the product’s defect.
4. Risk Monitoring
Risk monitoring involves observing and identifying change that affects the harmful effects of risk. The project team uses this strategy for the project schedule. Cost, schedule, productivity, or performance are aspects of the project that must be controlled in terms of the risks they pose when the project is completed.
Up to Sum
The risk reduction process is necessary for the correct and appropriate advancement of the organization’s goals. For this purpose, we can accept the existing risks at first. Next, by identifying and accepting the existing risks, let’s try to control them and then monitor the existing or possible risks.