Risk Strategy

Submitted by pramamurthy on Tue, 06/16/2009 - 19:31

The automotive redesign project is scheduled to run until the end of the year. There is the possibility that the union collective bargaining agreement will not be renewed immediately upon its expiration in the next month. If this happens, Senior Management has decided to give in to the union demands because the union labor play a key part in the success of the project, and the project finish date cannot slip because of a government required date. This is an example of what type of risk response?

 

1. Avoid

2.Accept

3. Transfer

4. Mitigate

 

What is the best choice of above and why. The answer that is there says 1, but Iam not conviced.

 Thanks 

Forums: 
PMP / CAPM exam Question bank
  • Log in to post comments
  • 7072 reads
admin's picture

admin

Wed, 06/17/2009 - 01:39

It should be 4. Mitigate... where did you find this answer / question.

 If this happens then we do this... is the case of mitgation.

pradeepsodha

Thu, 06/18/2009 - 13:11

I agree. Mitigate the risk is only solution

Pradeep

PMPCert

Thu, 06/18/2009 - 18:58

I think the Senior Management is willing to accept the demands and move forward and hence it is option 2. They are accepting the risk as it is and not trying to do anything about it.  Please let me know if any of you disagree with my interpretation and the reason for the same. Thanks.

Regards
Sujit

Puneet21

Sat, 06/20/2009 - 17:24

I would go with option 1 only. avoid as per me, is the right choice, because key word here is give in.

you are not doing anything and avoiding the situation withdrawal, so answer is choice 1.

acceptance would have been , had they knowingly agreed, not under pressure. now they are under pressure to give in, thats why. 

 

 

anithapr1999

Tue, 06/23/2009 - 03:54

I would say as Transfer

pradeepsodha

Tue, 06/23/2009 - 05:54

Can anybody say correct answer? The answer must have from some book or net so originator must have the answer.

Pradeep

BM

Tue, 06/23/2009 - 07:39

This is quite tricky one. However the correct answer as per my knowledge should be Acceptance (option 2). Now here goes the statement.

 

Acceptance means - The project team is trying to eliminate the said risk by just accepting the risk as its coming and they are not able to identify any other strategy to deal with this risk (Reference: PMBOK 4th Edition, p. 345, Plan Risk Responses: tools and techniques) , it could have been avoidance if the project due date was flexible enough to move/or could have been slipped (Reference: PMBOK 4th Edition, p. 344, Plan Risk Responses: tools and techniques) but as per the question the date cannot be changed nor its flexible, so it remains "Acceptance".Also the team is not ready to change the project management plan here they have to accept it, precisely its a Passive Risk acceptance where in no action except to document this strategy and leaving it on the project team to deal with the risk as they occur. 

 

May be I am wrong but I would have selected this option based on my experience and knowledge. 

Regards,

Bhupesh Mansukhani, PMP

 

 

vijjay

Wed, 02/10/2010 - 15:52

Mitigate - This is not a tricky question. It is very straight forward question. You are mitigating risk of delay by reducing its possible impact of labor non availability.

ChandraR

Wed, 02/10/2010 - 16:52

Accept is the best answer.  Mitigate involves taking additional steps to reduce the negative impact.  Avoid involves taking alternate ways that do not pose any risk compared to the current approach of completing the task.  Transfer involves outsourcing this task to somebody else and let him deal with the potential risks.  Accept means - you are aware of it but don't want to act on it and say - OK I will cross the bridge when I get there.  In this case you are fully aware that labor union may derail the project from its projected completion date- you accept that fact and you have no way of mitigating that risk or transferring that risk or avoiding it by pursuing alternate method as there are none.  So you simply Accept it and ready to cross the bridge by yielding to labor union demands when you get there

 

Chandra

vijjay

Wed, 02/10/2010 - 17:16

Chandra,

Here If it is decided that project will not listen to Union demand, it would have been accepting (it may lead to close the project). But management is mitigating risk of delay by accepting Union demand and labor will be available for project. Some contigency reserve will be spend for Union demad to mitigate risk.

ChandraR

Wed, 02/10/2010 - 19:08

Vijay,

Don't assume and read in between non existing lines.  Nothing was mentioned about contigency funds.   If you are jumping out of an airplane, you look for parachute to mitigate the risk.  Nothing was mentioned about providing any cushion to absorb the risk partly and mitigate the impact.  Also contigency funds are meant for project but Union demands, contracts, negotiations go beyond this project.

Chandra 

raj9

Thu, 07/01/2010 - 22:49

There are three key words  -


1)possibilities,


2)if this happens


3) Give in


Let us analyse the fact (no assumption) from given information and no reading between lines.


1) Union contract to end next month


2) Project end date is fixed.


3) Union  negotiation is still going on.they perceived/thought that it will broke down.


Risk response strategy will be decided on the state of risk.(that is risk already generated and identified).To forsee a risk is not Risk identification.


In this case risk is yet to be faced than identification - Union agreement is not broken down,management percieved that it will not go through( Read the key words - possibilities and if this happens).


Hence management acts (give in) to complete the project in time they go ahead with union's demand. Risk avoidance.


 


Thanks,


Raj


 

GrettaS

Wed, 02/10/2010 - 09:43

Most stores sell objects where price tag allocates fixed costs. When you find the opportunity to buy something on a bargain, grab it! A lot of people forget about this time honored tradition. Surveys done on the practice indicate that people that take the time for bargaining on certain purchases will eventually find themselves saving money from discounts derived from a good bargain.  It's part of an old tradition of haggling, but you have to know how to do it, and also how to pick your battles.  A car, or house, or refrigerator is perfect for haggling, but you can't haggle on, say, food.  You can save a few payday loans worth if you make the right bargain on the right item.  

Freddyb (not verified)

Wed, 03/03/2010 - 12:53

If you think about the fact that most payday advance charges cost around $10-$20 for every $100 that you borrow even at the high-priced sum that may add up it is typically a good deal less expensive than the total that you would be paying for the bill if you paid it in total. This leaves you to repay outstanding debt, save an ample sum of cash and clear up your credit totally at once. The advantages are gigantic and allows a sizeable sum of savings that you could utilize for supplemental wants.

ChandraR

Thu, 07/01/2010 - 23:35

Raj,

You dug out an old thread.  I still go with 'Acceptance" as answer.

If you know Plan A gets into troubles and risks and abandon that idea altogether and proceed with Plan B in the first place - such scenario counts as Avoidance as you are risk averse and don't want to take any slight chance.

If you know Plan A gets into troubles and risks but do nothing now- no plan B to minimize the risk(mitigate) - You simply " Accept" it and decide to cross the bridge when you get there.  Here the Management passively accepted the inherent risk and decided - if it happens- let us simply accept the reality and nod the head to Union's demands and let the project go smoothly on schedule. 

I am curious to hear counter arguments and justifications from you and other members

Chandra

gjc

Tue, 11/30/2010 - 17:38

I also go with 'Acceptance'  as the correct answer. 


If the threat materializes, the management are going to give into the union demands; this sounds like an active acceptance strategy to me


Mitigation would involve some early action to reduce the probability (or impact) of the threat materializing. 


Avoidance would involve changing the project management plan to eliminate the threat entirely.  I'm not sure how you would do that in this case.


Definitely not transference.


PMBOK 4th ED. pg 303-304.

hclhcl

Fri, 07/22/2011 - 06:08

Hello, everybody. I'm  XiaoHua, I'm glad to meet you. I'd like to help you in learning Chinese. Also hope to improve next myself in English.I hope we can be good friends
 

YeeHaw1234

Thu, 07/15/2010 - 17:19

What is the risk here?  What is the unknown?  The fact that the union MAY go on strike and delay the schedule.


By giving-in to the union demands, are you avoiding the risk?  Accepting it?  Transfering the risk?  Mitigating (minimalising?).


In my opinion:


If you are ACCEPTING the risk then you're saying "the union will go on strike no matter what we do so let's do nothing and let the schedule slip"


If you are TRANSFERING the risk, who is taking-on the risk of the union going on strike?


If you are MITIGATING the risk, is there still a chance the strike will happen?  You're giving the union what they want and in tern they agree to complete the project without striking

gjc

Fri, 01/07/2011 - 14:43

I see your point YeeHaw and I am changing my mind and starting to think mitigation is the best answer.......


I agree that the risk here is that the workers go on strike and therefore cause a delay in the schedule.  If the strike does happen then the trigger would have been that the union did not get their conditions agreed to.  By deciding in advance to agree to the union demands, this lessens the probability that the union negotiations will fail and hence reducing the probability of the strike (the risk) happening. I.e. this is mitigation.


Acceptance would be that if the strike happens, it happens.  Response strategies to acceptance however can be either passive (lets cross that particular bridge when we get to it) or active (lets put a contigency plan in place to deal with the impact of the strike should it happen).

aaron

Thu, 05/05/2011 - 17:22

I think there are two risks mentioned in the question.

1. Risk that it will be hard to manage Union Labor after the CBA is over

2. Risk that project will be delayed if Union Labor causes problems after CBA expiry.

The management seems to ACCEPT the risk that CBA will not be renewed and Union Labor will become more demanding. By doing this, they have AVOIDED the risk of project getting delayed because of CBA expiry.

sspawar

Tue, 06/05/2012 - 09:26

MNGT IS DOING NOTHING