Which risk response is applied on a pain/gain basis?
Which risk response is applied on a pain/gain basis?
The correct risk response that is applied on a pain/gain basis is 'share'. In this context, 'share' involves multiple parties agreeing to distribute both the gains and losses associated with a risk. This collaborative approach ensures that all parties are invested in managing the risk effectively. 'Accept' is a passive strategy where no action is taken, 'exploit' is aimed at taking advantage of an opportunity, and 'enhance' seeks to increase the potential benefits of an opportunity. None of these involve the shared risk and reward approach that characterizes the 'share' strategy.
The Correct answer is A. Share. This is a risk response that seeks multiple parties, typically within a supply chain, to share the risk on a pain/gain share basis. This can be a successful way of encouraging collaboration on risk management activities. The other options are not applied on a pain/gain basis, but rather on different criteria. For example, accept is a passive response that does not take any action to change the risk, exploit is an active response that seeks to increase the probability and/or impact of an opportunity, and enhance is a response that aims to improve the expected value of an opportunity.
Correct Ans. C. Exploit
Exploit is a risk response strategy that is used for positive risks or opportunities, also known as opportunities that can bring benefits or gains to the project. This strategy is used to ensure that the project team maximizes the potential benefits of a particular opportunity by taking advantage of it.
Share (risk response) A risk response to either a threat or an opportunity through the application of a pain/gain formula: both parties share the gain (within pre-agreed limits) if the cost is less than the cost plan, and both share the pain (again within pre-agreed limits) if the cost plan is exceeded. Accept (risk response) A risk response that means that the organization takes the chance that the risk will occur, with full impact on objectives if it does. Exploit (risk response) A risk response to an opportunity. It means seizing the opportunity to ensure that it will happen and that the impact will be realized. Enhance (risk response) A risk response to an opportunity where proactive actions are taken to enhance both the probability of the event occurring and the impact of the event should it occur.