Risk Response Strategies

Correct Answer: Mitigation

The correct answer is 'Mitigation'.

Mitigation is the risk response strategy that involves taking action to reduce the probability of occurrence or impact of a risk. This strategy aims to decrease the likelihood of a risk event happening or to minimize its negative effects if it does occur.

Explanation of other options:

'Acceptance' is a strategy where the project team decides to acknowledge the risk and not take any action unless the risk occurs. This is typically used for low-impact risks or when the cost of other strategies outweighs the potential impact.

'Avoidance' is a strategy that involves changing the project plan to eliminate the risk entirely. This might include changing objectives or altering the approach to make the risk irrelevant.

'Transference' is a strategy where the impact of a risk is shifted to a third party. This often involves purchasing insurance, using contracts, or outsourcing risky activities.

In project management, mitigation is the most proactive approach to dealing with risks while still proceeding with the project as planned. It involves taking specific actions to reduce either the probability or the impact of a risk, making it the best fit for the description provided in the question.

Correct Answer: Exploit

The most suitable risk response strategy in this case, where the new technology can enhance outcome and has a high chance of success, is 'Exploit'. Exploit is used when an opportunity is discovered, and strategies are deployed to ensure that opportunity is realized. This strategy may involve adding more resources or changing the process to support the opportunity. The other options are not suitable in this context: 'Enhance' is used to increase the probability of positive risks (opportunities) or increase their benefits, while the scenario specifically states that the technology already has a high chance of success. 'Accept' is when no special risk response is taken for the risk, which can be considered a missed chance to maximize the potential benefits in this particular case. 'Avoid' is to avoid any exposure to the risk, which is not applicable here as the scenario presents an opportunity, not a threat.

Correct Answer: Transfer

Purchasing insurance is an example of **risk transfer**. By obtaining insurance, the project manager shifts the potential financial impact of a threat to the insurance company. If the risk event occurs, the insurer absorbs the losses instead of the project. **Risk mitigation** involves taking actions to reduce the likelihood or impact of a risk, such as implementing safety measures or quality controls, which is not achieved by buying insurance. **Risk avoidance** means changing the project plan to eliminate the risk entirely, such as removing a risky activity from the project scope. **Risk acceptance** involves acknowledging the risk and choosing not to take any action unless the risk occurs, accepting the consequences if it does.