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Scenario Planning: Supplementing Traditional Strategic Planning

It is clear the rate of change in today's work environments has been aggravating with more emphasis nowadays on smaller teams, incremental and rapid delivery, faster payback, and frequent project status reporting. This acceleration has instigated uncertainty that forced organisations to start supporting their strategic planning with a longer term perspective of planning called scenario planning or scenario thinking/analysis. Scenario ...

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A Simple Method to Split a WordPress Post into Multiple Pages

A Simple Method to Split a Wordpress Post into Multiple Pages

One of the most effective ways to increase the number of page views and decrease the bounce rate of your site is by splitting your long posts into several pages. In the first part of the article, you will learn in 2 steps how to split a post in Wordpress using the codex function wp_link_pages() and the <!––nextpage––> tag. In the second ...

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Boosting Your WordPress Site’s Performance By Enabling GZIP Compression

Boosting Your Wordpress Site's Performance By Enabling GZIP Compression

Ever heard of GZIP? It is a simple software application that compresses/decompresses files based on an algorithm named DEFLATE. It works by finding similar strings in a text file and replacing them temporarily to make the overall file size smaller which would drastically improve the performance of your website. The algorithm perfectly works with CSS and HTML filetypes which typically ...

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Improving Quality of Project Estimation

It is clear that estimating a project is important for the project manager to determine how long the project would take, to figure out how much the project would cost, to decide whether the project is worth doing, to measure variances against the baseline plan, and to take corrective actions. However some project managers nowadays tend to put minimum effort ...

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Avoiding Common Pitfalls of High Performance Project Teams

Previously in one of my earlier articles, I discussed the key qualities required for a project manager to be effective in building a high performance project team. Believe it or not, though high performance project teams can produce incredible outcomes, there still remain some serious pitfalls that project managers need to be aware of in order not to fall victims ...

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Contract Management Must-Knows For Project Managers

Contract management constitutes a major component of a project procurement system. Most work done nowadays on projects involves dealing with contracts or has a contractual nature. Although some companies have purchasing departments that specialize in procurement, one of the basic knowledge and skills of a project manager is to be able to read and manage contracts. This post basically discusses ...

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Understanding And Managing Your Boss

The idea of “managing your boss” may sound quite unusual for some managers, considering the widespread adoption of the traditional top down management approach in most organizations. Even though talented and aggressive managers nowadays carefully control and administer their subordinates, services, and products, they might reveal, on the other hand, a passive stand with their bosses (Gabarro and Kotter 1993). ...

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Changes in Project Management Processes Between PMBOK 4 And PMBOK 5

This post presents a tabulated summary of differences in the names, inputs, tools, and outputs of project management processes between PMBOK 4 and PMBOK 5. Note that terms in Red which exist in PMBOK 4 have been removed or replaced in PMBOK 5, terms in Blue have been newly added into PMBOK 5, and terms in Black have not ...

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Critical Analysis of Porter's Five Forces Model - Information Technology (IT) Industry

In order to appropriately formulate their corporate strategies and distinctively compete in the market, organizations are in a need for a framework that would help them in understanding industry structure and in overcoming rivalry. This essay aims at discussing, analyzing, and criticizing Porter’s Five Forces model using a wide variety of academic literature. The first part introduces the model, discusses ...

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Key Qualities For An Effective Project Manager

This post describes key qualities needed for an effective project manager. It discusses the differences between leading and managing a project, explains the importance of managing stakeholders, describes how to gain influence by reciprocity, stresses on the significance of leading by example and managing by wandering around (MBWA), explores how to deal with the contradictory nature of work, and finally ...

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Home > Risk Management > Risk: Mitigation Strategies And Decision Making

Risk: Mitigation Strategies And Decision Making

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There exist several mitigation strategies that help managers in understanding risks and their impact on the business and on the organizational objectives. These treatment strategies are mainly branched into four common categories; risk avoidance or elimination, risk transference or share, risk mitigation, and risk acceptance. The choice of which of these methods to implement depends on the kind of the adopted decision-making model and on certain weighted, influential, organizational factors that should be taken into consideration in prioritizing, evaluating, and resolving risks. Since elimination of risk is unrealizable or almost impossible (Cervone 2006), managers should utilize the least cost methodology and the most appropriate control to lessen risks to a level corresponding to minimal impact. Besides, priority should be given to mitigating severe or high-impact risks since it would be impractical to address all recognized risks (Stoneburner, Goguen et al. 2002).

A risk manager should take into consideration several vital decision making tools to safely conduct an exhaustive risk analysis. An important tool might be the Decision Tree Analysis (DTA), which helps in identifying alternative risk mitigation responses. By calculating the weighted average of the expected payoff (the expected monetary value), while considering several factors (to be discussed later in the text) for each response, the DTA technique would help in choosing the most optimal and objective risk decision option (Prasanta Kumar 2001). Each alternative response generated by DTA would be categorized into one or more of the treatment strategies mentioned above. This categorization could possibly be based on a matrix-based scheme that includes the dimensions of probability and impact (Cervone 2006). A third possible dimension might be a discrimination factor that measures the impact of risk on the overall project or organizational strategy (Cervone 2006).

A common risk mitigation strategy is to identify the costs and benefits of implementing the various treatment options for a given risk. However, consideration for the compatibility, acceptance, and efficacy of these options, and the physical and human resource requirements for executing them is also crucial (Stoneburner, Goguen et al. 2002). Besides, Queensland Treasury’s Risk Management guide (2011) stresses on the internal and external environment, the risk appetite of the organization and the stakeholders, and the legal requirements as decisive factors in the risk treatment implementation. It also considers other important factors like the environmental, social, or political costs, stakeholders’ perceptions and involvement, the integration of treatment with the organization’s strategy and business, and finally the careful handling of secondary risks as a result of implementing the treatment controls. It would also be necessary to consider the time to implement the resolution activity versus the urgency of dealing with the risk (Dorian 2012). However, risk managers should be aware of the fact that time pressures can lead to misunderstanding of risks especially when they show overconfidence of quantitative data, which would consequently lead to deviation from organizational goals and an insensitivity to uncertainty (2005). All of these aforementioned controls would need to be rated through certain techniques and given specific weights that would aid in prioritizing risks. These ratings are highly dependent on the organizational behavior and culture and on its receptivity or adversity in absorbing risks (Jun Ying and Sui Pheng 2009).

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