The Positive Risk Dilemma!

Let’s start with a story…

An IT company – let’s call it Company X, once had to set up its operations in Pune, India to exploit the Human Capital available close to the financial hub of India – Mumbai at a lesser cost. They came across an opportunity announced by the government that a region would be declared Special Economic Zone if a company showcases a business case with numbers on employment that would be generated if the SEZ is granted.

IT companies love to set up and work out of SEZ’s for the simple reason that tax cost is exempted for the first few years.

Company X’s leadership operated aggressively and a lot of business was captured by sourcing information about other companies contractual information and bidding a lesser amount for the same business

Consequently, Company X developed a lot of foes & competitors in its industry from its years of operations. But the Project Management Office saw an opportunity in this competition and rivalry!!!

Guess what!!! This Company X tied up with its rivals & competitors to draft a business case for the employment to be generated if Special Economic Zone is approved.

Eventually, the Business Case got approved and the company got to set up its own unit in Pune, along with its competitors & rivals.

The Project Manager’s involved in this Project used a Risk Management strategy known as Exploit & Share. This was a positive risk – an opportunity for the Project Management Office.

Many of us believe that risks create an adverse impact on projects; it is not always true. Risk can be positive also. Now the question is – what is a positive risk?

It is something like an opportunity is there, but we have some risk to realize it. If these risks occur, you will get gains or benefits in the projects. And, we need risk responses to realize these risks.

If positive risks occur, they have a positive impact on the project objectives. These favorable opportunities tend to save costs and other resources of the project. Unlike Negative Risks, here you aim to make this uncertain event happen.

In negative risks, you intend to avoid or to reduce its impact. This is the basic difference between a positive and negative risk.

There are five strategies of managing a positive risk:

Remember >> SEEEA

  • Share: You explore & make a partnership to realize risk as you feel you cannot execute it alone.
  • Escalate: You escalate the risk to your seniors Leads because you do not have the authority to execute steps of risk response strategies.
  • Exploit: You explore strategies to make sure risk happens for sure.
  • Enhance: You are not 100% sure of risk realization so you explore strategies to increase its probability.
  • Accept: You choose not to take any actions to realize risks, but you monitor it if it becomes important to get risk response strategies.

Another Example:

A Project Manager working on a multi year project is requested by the sponsor to deliver the end product 2 months in advance. And for this the sponsor will the same contracted amount and an incentive. The Project Manager wants to realize this opportunity and uses fast tracking.{running multiple tasks in parallel} . This is an example of Enhance as a Risk Management Strategy

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