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Risk Mitigation Plan
Denise Perez
Rasmussen University
GEB3422CBE: Business Project Management
David Jones
June 17, 2023
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Risk Mitigation Plan
Kinston-Bryce Limited is looking to acquire its competitor, Bob’s Wood Working, to expand its
operations and triple its workforce. This project will take 18 months and will cost 5 million US dollars.
There are risks associated with every project, and the Kingston-Bryce Limited project is no different. To
plan, diminish, and mitigate associated risks, it is vital to have a comprehensive risk mitigation plan. A
comprehensive risk mitigation plan allows the team to shorten reaction time, have guidance on handling
risks, and lessen the loss associated with the threat. Below, I will cover four significant ways to mitigate
risk: risk avoidance, risk sharing, risk reduction, and risk transfer relayed to the KBL project and its
specific risk-mitigating plan.
Risk Avoidance
Risk avoidance is one way to deal with risk by avoiding threats, actions, or exposures that can
negatively compromise the project budget or timeline. A business must identify threats to the
organization, assets, capital, earnings, and revenue. It assesses the probability of those risks that could
potentially impact the business in a negative form. This strategy avoidance typically involves running
your organization in a way that eliminates specific hazards and exposures that might result in a lawsuit or
some other financial loss. A risk avoidance strategy can deflect as many threats as possible. An example
of risk avoidance is a manufacturing business not using hazardous materials or chemicals because of the
dangers of handling and storing them. Another example of risk avoidance is an organization limiting the
type of customer data it stores and ensuring the business meets data privacy regulations on its
computers during a cyberattack[ CITATION Mar \l 1033 ]ck. Attempts to minimize all controllable
vulnerabilities can be made by changing the project management plan to eliminate the threat. Examples
include extending the project schedule to accommodate the risk, thus avoiding it, or changing/reducing
the project scope to avoid it altogether. Additional examples of strategies to use risk avoidance could be;
when there is an electrical storm, halting the project would avoid any risk of someone getting hurt.
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Risk Sharing
Risk sharing means partnering with others to share responsibility for the risk activities. Risk
sharing reduces the impact of political, legal, and labor risks while actively increasing the stability of the
project [ CITATION Pro \l 1033 ]. One strategy for risk sharing is to diversify. This means putting a little
money in many places so that the demise of one investment does not wipe out the investor [ CITATION
Jac22 \l 1033 ]. Another risk-sharing strategy would be outsourcing; this means removing a unit or
function from the organization and subsequently contracting another entity to do the work. Additional
advantages of outsourcing include an improved focus on core business activities, freeing up your
business to focus on its strengths and allowing the team to concentrate on its main tasks. Outsourcing
may also provide increased efficiency, controlled costs, and controlled costs. Outsourcing cost savings
can help release capital for investment in other business areas [ CITATION Out \l 1033 ]
Risk Reduction
Risk reduction means mitigating a potential loss by reducing the likelihood and severity of a
possible loss. An example of risk reduction would be an investor considering investing in oil stocks and
may decide to avoid taking a stake in the company because of oil’s political and credit risk. A part of risk
reduction involves controlling risk. This strategy works by considering risks identified and accepted and
then taking actions to reduce or eliminate the impacts of these risks. Having a contingency budget can
help absorb unexpected costs if they arise. Reducing risks usually requires some effort or investment. An
example, a project manager could hire new team members if the team is falling behind on work. By
analyzing your project data, risk management software helps you devise ways to reduce the impact of
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risks. For example, if you know a supplier is unreliable[ CITATION Shu22 \l 1033 ], you can source your
supplies from another vendor.
Risk Transfer
Risk Transfer is a risk reduction method that moves the risk of the project to another individual.
By doing so, the business can mitigate the impact on the project if something goes wrong; it will also
protect the project from possible setbacks. Transferring risks also helps reduce your business's risk
exposure and financial liability and speeds up the overall project by eliminating uncertainty or ambiguity.
Including a risk-transferring strategy as early as possible is advised, preferably during the planning stage.
This helps take all the necessary steps to reduce or eliminate potential risks. When deciding whether to
include risk transferring strategy in the project, some factors to consider are the probability of the risk
occurring, any legal restrictions, the available options for transferring risk, and the risk and benefits of
not transferring the risk. The most common example of risk transfer is insurance. When an individual or
entity purchases insurance, they insure against financial risks. This is to pass the financial liability of risks,
like legal expenses, damages awarded, and repair costs, to the party responsible should an accident or
injury occur on the business’s property.
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References
Gupta, S. (2022). capterra.com. Retrieved from 4 risk management strategies for successful project
execution.
Jack Woerner, S. T. (2022). What is risk sharing. Retrieved from study.com.
Outsourcing. (n.d.). Retrieved from nibusinessinfo.co.uk.
Pratt, M. K. (n.d.). techtarget.com.
Project Management. (n.d.). Retrieved from Risk Mitigation: open.lib.umn.edu
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