PMGT5891 Chap.5 Risk Treatment and Response Strategies
Risk Treatment and Response Strategies
This chapter covers what happens after a risk has been assessed and ranked. It sets the seven treatment options in the 2018 edition of ISO 31000 beside the threat responses most standards share and the opportunity responses that PRAM and the PMBOK Guide add.
You will learn to price a response by comparing the drop in expected monetary value with what the response costs, and to recognise when a rare but severe risk deserves treatment anyway. The chapter also separates mitigation, contingency plans and fallback plans, explains residual and secondary risk, and shows how a named risk owner, monitoring and reporting keep a treatment working after the decision is made.
What this chapter covers
- 01
ISO 31000 treatment options and the four post-assessment steps
- 02
Threat responses: avoid, reduce, transfer, accept
- 03
Opportunity responses: exploit, enhance, share, accept, escalate
- 04
Pricing a response: EMV reduction against treatment cost
- 05
Mitigation, contingency plans and fallback plans
- 06
Triggers and the timing of each response
- 07
Residual risk and secondary risk
- 08
Risk owners, monitoring and colour-coded reporting
Worked example · free
Sprinklers or housekeeping for a warehouse fire risk
- +1Untreated EMV: 0.08 x $500,000 = $40,000.
- +1Option A: 0.08 x $150,000 = $12,000 left, a reduction of $28,000; less the $22,000 cost leaves a net benefit of $6,000.
- +1Option B: 0.05 x $500,000 = $25,000 left, a reduction of $15,000; less the $5,000 cost leaves a net benefit of $10,000.
- +1Both together: 0.05 x $150,000 = $7,500 left, a reduction of $32,500; less $27,000 of combined cost leaves $5,500.
- +1Recommend B on the numbers, then note that ISO 31000 lets the firm add sprinklers if a $500,000 loss would threaten its survival or a legal duty.
Key terms
- Risk treatment
- Risk treatment is the process of selecting and implementing options for addressing a risk, then checking whether what remains is acceptable.
- Contingency plan
- A contingency plan is a response prepared in advance and carried out only when agreed warning signals show the risk is occurring.
- Fallback plan
- A fallback plan is the standard project term for the reserve response used when the contingency plan fails or proves inadequate.
- Residual risk
- Residual risk is the risk that remains after treatment, which the 2009 edition of ISO 31000 notes may also be called retained risk.
- Secondary risk
- Secondary risk is a new risk created by the response chosen to treat an original risk.
Risk Treatment and Response Strategies FAQ
What is the difference between risk mitigation and contingency planning?
Mitigation is action taken before the risk occurs to lower its probability or impact, so its cost is spent whether or not the event happens. Contingency planning prepares a recovery response in advance but only spends money once a trigger shows the risk is happening. Many registers use both on one risk: a preventive step now and a recovery plan ready if prevention fails.
Is accepting a risk the same as ignoring it?
No. ISO 31000 describes retention as an informed decision, which means the risk has been assessed, judged tolerable or too costly to treat, and recorded. An accepted risk still needs an owner and regular review, because its probability or impact can change. Baccarini also notes that unidentified risks are retained without anyone choosing to, which is the real danger.
How do opportunity responses mirror threat responses?
Avoiding a threat pairs with exploiting an opportunity, since both remove uncertainty. Transfer pairs with sharing, for example through a joint venture. Reducing a threat pairs with enhancing an opportunity's chance or size, and acceptance applies to both. PMI also lists escalation when the response lies outside the project's scope or authority.
Can a treatment be justified if it costs more than the EMV it removes?
Yes, in some cases. ISO 31000 says justification is broader than economics and should reflect obligations, voluntary commitments and stakeholder views. A rare event with a catastrophic consequence, such as loss of life, can warrant spending that fails a simple expected value test. Make that reasoning explicit rather than leaving the numbers to contradict the recommendation.
Exam move
Build a one-page response sheet before the assessment period. In the first column list the seven ISO 31000 options; in the next two columns write the matching threat and opportunity responses, so you can translate between ISO wording and PMI wording on demand.
Then practise pricing: take any three risks from your group case, give each a probability and impact, invent one preventive and one recovery response, and compute the net benefit of each. Time yourself at about five minutes per risk. Finish every practice answer with three lines: the residual exposure, the risk owner, and the trigger for the contingency plan.
Students often lose clarity by naming a response without saying when it acts, so rehearse the mitigation, contingency, fallback sequence aloud until you can give an example of each for one risk.
Working through Risk Treatment and Response Strategies in PMGT5891? Sia is AskSia’s AI Project Management tutor — ask any PMGT5891 Risk Treatment and Response Strategies question and get a clear, step-by-step explanation grounded in how PMGT5891 is taught and assessed. Read this chapter free, then take your hardest questions to Sia.
