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Topics: Risk Management
How to treat positive risks?
Network:43



Is it true that while selecting responses to risks, we try to shift their position from red zone to the green? What about the positive risks? I brlieve they should be take a reverse path from green to yellow and from yellow to the red zone.if i am right, then the number of “red” , “yellow” or “green” risks would no longer be a good metric to show the project riskiness. Moreover, how the overall score of risks can be determined taking into consideration the effect of good risks?
The PMBOK says: “ when the level of overall project risk is significantly positive and outside the agreed-upon risk thresholds for the project , an exploit strategy may be adopted”. And as as a solution it says that for such risks the risk thresholds for the project may be modified to embrace the opportunity. I think there is something wrong with this definition. Could anyone make and example for such approach?
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Treating positive risks is mostly driven by PM in concurrence/support by Top Management
Network:1686



Color assigned to a risk is a matter of each organization clasification regarding of risk impact. Color assigned to risk is for visualization porposes. Responses to risk are not to move them from one color to other. They are just to support the defined risk strategy. To calculare the final risk score positive risk must be taken into account. That is what we do in my actual work place and in accordance to that we define what we name "project tier". Project tier defines some actions we have to take mainly related to project governance. When you have an opportunity (positive risk) the actions to be taken could be exploit, share, enhace. For example, related to share, if you have the opportunity to get a new business and you detect that you can make a parnership with other company better prepare than you in some component of the business.
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1 reply by MEHRAN KHALILNEJADI
Oct 05, 2018 1:23 AM
MEHRAN KHALILNEJADI
...
Thank you Sergio,
But my concern was not the color coding or the way they are defined, what I was trying to ask was how and when we should stop planing responses to the positive risks. For negative ones, when their probability or impact or the combination of them decreases enough (compared to our organization pre-defined thresholds), we put them into “watch list” and since then we will just monitor them. (The ideal situation is that we can find responses effective enough so there would be no more threat categorized as medium or high)
My question was how we should deal with positive ones? How you can ensure that all opportunities are given proper responses and we can move on to the next step of our planing?
The main reason for referring to the PMBOK, was asking that when the score of the overall project risk is OUTSIDE the agreed upon thresholds (which means we should do something about it), how we can realize it by modifying our thresholds, as PMBOK says?
Can you please make an example?
Network:1164



Mehran -

RYG scales are organization-specific and not part of any standard. However, overall risk scoring does come into play when you look at things like reserve analysis. Threats will increase your need for reserves while opportunities may reduce them.

Kiron
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1 reply by MEHRAN KHALILNEJADI
Oct 05, 2018 2:05 AM
MEHRAN KHALILNEJADI
...
Kiron
I totally agree with you in this regard but my question is not how these thresholds are defined. My question is specifically for positive risks, what does exactly a threshold mean? If we interpret it as a level that separates tolerable and intolerable risks from each other, then where do positive risks the probability or impact of which was high enough that made them be classified as “high” , stand? Inside or outside of our comfort zone? Why if a “high” positive risk is placed outside of our thresholds , meaning that it is interesting enough that worth doing some action to realize it, we should modify our thresholds to embrace that , as PMBOK says? Did I make myself clear?
Network:850



I don't think you can average out the threats and opportunities of a single project and stablish that you are in a stable situation, in the sense that it is completely different

1) Having ten high severity risks on the project: five threats and five opportunities. If you even out the benefits, the averaged probability x impact is almost null

2) Having only low risks on the project, and the same almost null average impact

The first project is much more challenging and subject to ups and downs than the second one. And it should be viewed as a higher uncertainty one. Returns should be considerably more positive than the other one for the company to undertake the project in its portfolio. And reserves should be higher. Do you agree?
Network:43



Oct 04, 2018 5:37 AM
Replying to Sergio Luis Conte
...
Color assigned to a risk is a matter of each organization clasification regarding of risk impact. Color assigned to risk is for visualization porposes. Responses to risk are not to move them from one color to other. They are just to support the defined risk strategy. To calculare the final risk score positive risk must be taken into account. That is what we do in my actual work place and in accordance to that we define what we name "project tier". Project tier defines some actions we have to take mainly related to project governance. When you have an opportunity (positive risk) the actions to be taken could be exploit, share, enhace. For example, related to share, if you have the opportunity to get a new business and you detect that you can make a parnership with other company better prepare than you in some component of the business.
Thank you Sergio,
But my concern was not the color coding or the way they are defined, what I was trying to ask was how and when we should stop planing responses to the positive risks. For negative ones, when their probability or impact or the combination of them decreases enough (compared to our organization pre-defined thresholds), we put them into “watch list” and since then we will just monitor them. (The ideal situation is that we can find responses effective enough so there would be no more threat categorized as medium or high)
My question was how we should deal with positive ones? How you can ensure that all opportunities are given proper responses and we can move on to the next step of our planing?
The main reason for referring to the PMBOK, was asking that when the score of the overall project risk is OUTSIDE the agreed upon thresholds (which means we should do something about it), how we can realize it by modifying our thresholds, as PMBOK says?
Can you please make an example?
...
1 reply by Sergio Luis Conte
Oct 05, 2018 5:21 AM
Sergio Luis Conte
...
Positive Risk has to be managed in the same way than negative. On the other side, the focus is project risks then risks outside project scope have to be taken into account just to maintain trazability or to define project risks.
Network:43



Thanks Guilherme,
My question had two parts:
The first was criticizing the traditional metrics of explaining a project’s degree of riskiness by numbering the medium , low and high identified risks. Because high risks may include opportunities and although they are categorized as “high” they represent desirable status of the project.
But in the second part, I was trying interpret the PMBOK sentence that recommends modifying the thresholds in order to emrace the positive risks tha because of their high score are placed out of our organization thresholds. If we consider that the thresholds represent an area within which the risks are recognized as tolerable (meaning that we are not interested to do something about them) and outside of which the risks (positive ones) should be treated somehow, then how modifying thresholds can help us to embrace those on the outside? I think this paragraph suffers from tsome kind of bias like perceiving all risks as “BAD” things.
Don’t you agree?
Network:43



Oct 04, 2018 8:19 AM
Replying to Kiron Bondale
...
Mehran -

RYG scales are organization-specific and not part of any standard. However, overall risk scoring does come into play when you look at things like reserve analysis. Threats will increase your need for reserves while opportunities may reduce them.

Kiron
Kiron
I totally agree with you in this regard but my question is not how these thresholds are defined. My question is specifically for positive risks, what does exactly a threshold mean? If we interpret it as a level that separates tolerable and intolerable risks from each other, then where do positive risks the probability or impact of which was high enough that made them be classified as “high” , stand? Inside or outside of our comfort zone? Why if a “high” positive risk is placed outside of our thresholds , meaning that it is interesting enough that worth doing some action to realize it, we should modify our thresholds to embrace that , as PMBOK says? Did I make myself clear?
Network:1686



Oct 05, 2018 1:23 AM
Replying to MEHRAN KHALILNEJADI
...
Thank you Sergio,
But my concern was not the color coding or the way they are defined, what I was trying to ask was how and when we should stop planing responses to the positive risks. For negative ones, when their probability or impact or the combination of them decreases enough (compared to our organization pre-defined thresholds), we put them into “watch list” and since then we will just monitor them. (The ideal situation is that we can find responses effective enough so there would be no more threat categorized as medium or high)
My question was how we should deal with positive ones? How you can ensure that all opportunities are given proper responses and we can move on to the next step of our planing?
The main reason for referring to the PMBOK, was asking that when the score of the overall project risk is OUTSIDE the agreed upon thresholds (which means we should do something about it), how we can realize it by modifying our thresholds, as PMBOK says?
Can you please make an example?
Positive Risk has to be managed in the same way than negative. On the other side, the focus is project risks then risks outside project scope have to be taken into account just to maintain trazability or to define project risks.
Network:43



Anybody?

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