Control Action - Balancing the risk

The risk response process should involve identifying and evaluating a range of options for treating risks and preparing and implementing risk management plans. It is important that the control action put in place is proportional to the risk. Every control has anassociated cost. The control action must offer value for money in relation to the risk that it is controlling.

Selection of the risk actions to take is a balance between anumber of things. For each possible action it is, first, a question of balancing the cost of taking that action against the likelihood and impact of allowing the risk to occur. For example, if a charity carnival is arranged, is it worth taking out insurance for £3,000 guaranteeing £6,000 if the carnival is rained off? Or, since the carnival date is in summer, do we take the risk and not spend the insurance money? But the selection is usually more complex than that. There are many elements to be taken into consideration.

Risk Action Selection

There may be several possible risk actions, each with different effects. The choice may be one of these options or a combination of two or more. We then have to consider the impact of (a) the risk occurring and (b) the risk action on:

• The team, Stage and/or Project Plans
• The business or programme
• The Business Case
• Other parts of the project.

The consideration has to be done in the light of the risk tolerances.