RISK TREATMENT

Risk treatment consists of determining what will be done in response to the risks that have been identified, for the purpose of reducing the potential risk exposure. Any controls and plans in place before the risk management process began are augmented with Risk Action Plans to deal with risks before they arise and contingency plans with which to recover if a risk comes to pass. At the end of successful risk treatment planning, detailed ideas will have been developed and documented about the best ways of dealing with each major risk, and Risk Action Plans will have been formulated for putting the responses into effect. In addition to these project-specific plans, risk treatment might also include alteration of the base plans of the business – for example, what should the business do if a planned manufacturing plant extension is not commissioned on time? Occasionally the best way to treat a risk might be to adopt an alternative strategy, to avoid a risk or make the organization less vulnerable to its consequences.

Trade-offs will often be required when selecting treatment options: for example, between scope, cost and schedule. The process of selecting and developing effective risk treatments involves (Figure 6.1):
• identifying the options for reducing the likelihood or consequences of each Extreme or High risk;
• determining the potential benefits and costs of each option, including the possible impact on the organization if the risk occurred, the reduced level of risk if the option were implemented, the potential benefits of the reduced level of risk, and the costs of achieving those benefits, including both direct and indirect costs and the effects of any schedule delays;
• selecting the best options for the project;
• for options that have the form of contingency plans, specifying the symptoms or trigger points at which the option might be implemented;
• identifying links to related processes or activities within or outside the project; and
• developing detailed Risk Action Plans.