You are the project manager for a construction project. The project involves casting of a column in a very narrow space. Because of lack of space, casting it is highly dangerous. High technical skill will be required for casting that column. You decide to hire a local expert team for casting that column. Which of the following types of risk response are you following?

A.
Acceptance

B.
Avoidance

C.
Mitigation

D.
Transference

Explanation:

According to the question, you are hiring a local expert team for casting the column. As you have transferred your risk to a third party, this is the transference risk response that you have adopted. Transference is a strategy to mitigate negative risks or threats. In this strategy, consequences and the ownership of a risk is transferred to a third party. This strategy does not eliminate the risk but transfers responsibility of managing the risk to another party. Insurance is an example of transference.

Answer option C is incorrect. Mitigation is a risk response planning technique associated with threats that seeks to reduce the probability of occurrence or impact of a risk to below an acceptable threshold. Risk mitigation involves taking early action to reduce the probability and impact of a risk occurring on the project. Adopting less complex processes, conducting more tests, or choosing a more stable supplier are examples of mitigation actions.

Answer option B is incorrect. Avoidance involves changing the project management plan to eliminate the threat entirely.

Answer option A is incorrect. Acceptance response is a part of Risk Response planning process. Acceptance response delineates that the project plan will not be changed to deal with the risk. Management may develop a contingency plan if the risk does occur. Acceptance response to a risk event is a strategy that can be used for risks that pose either threats or opportunities. Acceptance response can be of two types:

Passive acceptance: It is a strategy in which no plans are made to try or avoid or mitigate the risk. Active acceptance: Such responses include developing contingency reserves to deal with risks, in case they occur.

Acceptance is the only response for both threats and opportunities.

Reference: A Guide to the Project Management Body of Knowledge, (PMBOK Guide), Fourth Edition, ISBN:9781933890517, Section 11.5.2.1.