Risk Response Planning

Correct Answer: Risk mitigation strategy

The described action is a Risk Mitigation strategy because: The team is taking proactive steps to reduce the probability and/or impact of a risk (price increase) by purchasing materials early and storing them. This approach diminishes the threat of price fluctuations affecting the project budget. Why other options are incorrect: Risk acceptance with contingency reserves would mean setting aside extra funds to deal with price increases if they occur, rather than taking action to prevent the impact. Risk transfer would involve shifting the risk to another party (like a supplier) through contracts or insurance. Risk enhancement is used for positive risks (opportunities) to increase their probability or impact, which does not apply in this scenario of protecting against price increases.

Correct Answer: Mitigate

This is a clear example of a Mitigation strategy in risk management. Mitigation aims to reduce the probability and/or impact of an adverse risk event to an acceptable threshold by taking actions ahead of time. The project manager is choosing to take preventive measures to reduce the risk of supply chain disruptions, hence they are mitigating the risk. Accepting the risk would mean no action was taken and Transfer would mean shifting the impact of a risk to a third party together with ownership of the response, which is not the case here. Avoidance would refer to changing the project plan to avoid the risk altogether which is also not being done in this scenario.

Correct Answer: Avoidance

In this scenario, the project manager is implementing the risk response strategy of 'Avoidance'. The risk here is the potential data leakage due to a vulnerable API. This risk is completely avoided by switching to a more secure API, therefore preventing the possibility of this risk happening. Therefore, this strategy is considered as 'Avoidance'. Let's look at why other answers are incorrect. 'Mitigation' would involve taking steps to lessen the impact of the risk, not completely avoid it. If the project manager had chosen to add some extra security layers to the existing vulnerable API, it could be considered as 'Mitigation', but that's not the case here. 'Acceptance' involves taking no action towards the risk and accepting its consequences and 'Transference' involves transferring the impact of the risk to a third party, such as an insurer, neither of these are the case in this scenario.