David is the project manager of the HRC Project. He has identified a risk in the project, which could cause the delay in the project. David does not want this risk event to happen so he takes few actions to ensure that the risk event will not happen. These extra steps, however, cost the project an additional $10,000. What type of risk response has David adopted?
David is adopting risk avoidance because he is taking actions specifically to ensure that the risk event will not occur at all. Risk avoidance involves altering plans or taking proactive measures to eliminate the risk entirely, even if this involves additional costs. The $10,000 spent by David indicates that he has revised aspects of the project to eliminate the risk, consistent with risk avoidance.
Because he's mitigating the potential of the even happening by spending the $10,000. If he was to "avoid" the risk, he would be avoiding the potential scenario that would arise and cause the risk. By taking action, it has to be either mitigation or transfer - and it does not outline who the risk was transferred onto - thereby, it must be mitigation.
The answer is B since he has spent money to ensure the risk event will not happen. Risk avoidance will not be the answer as in risk avoidance you exit from doing the particular activity that gives rise to risk. Sine safeguards are implemented with a cost, ans is mitigation
Statement said David take action so that risk event will not happen. So why is the answer not risk avoidance?
Risk avoidance means the project is NOT undertaken. The answer cant be AVOIDANCE and still spend $10000.. it has to expend that cost while MITIGATING the risk. $10k is the cost mitigation....could mean hiring additional staff, building a wall (like USA boarder--LOL)
A. Avoidance: Risk avoidance involves changing the project plan to eliminate the risk or to protect the project objectives from its impact. This typically means altering the way things are done, so the risk is no longer applicable. In this case, David has taken specific actions to ensure that the risk event will not happen, which aligns with the avoidance strategy. The additional cost of $10,000 indicates that he has likely altered or revised aspects of the project plan to completely avoid the risk
ENSURE that it WILL NOT happen! That surely cant be mitigation, but avoidance. Its possible to avoid risk in a project by totally avoiding that scenario. Eg. The plan was to buy Material from an overseas supplier for $100000, but due to potential logistical issues you elect to buy from a supplier next door who can deliver instantly but charges $110000 for the exact same materials. That surely would be risk avoidance because it ENSURE that late delivery WILL NOT happen.
But it says that it "costs" an additional $10.000, in other words, he's paying for a safeguard, I don't think that risk avoidance ends up in you paying more, it may lead to not making $10.000 because the opportunity is not taken.
Correct. B. Mitigation. David has adopted a risk response of mitigation. Mitigation is a risk response strategy that aims to reduce the probability or impact of a risk event. In this case, David has identified a risk that could potentially cause a delay in the project. To prevent this risk event from occurring, he takes additional actions or steps. By taking these extra steps, David is proactively addressing the risk and implementing measures to reduce the likelihood or impact of the risk event. However, these actions come at an additional cost of $10,000 to the project.
I would choose 'A' rather than 'B' based on the wording of this question. Mitigation by its very definition, does not ensure a risk will not happen. It reduces the likelihood but does not guarantee the risk will not occur. The only way to ensure or guarantee a risk will not occur is to avoid the risk entirely. This does not mean the entire project is avoided, but perhaps additional money was spent for an alternative that enabled the project to proceed while avoiding the original risk.
Risk Mitigation (B)
my thoughts exactly