A risk treatment is mandatorily a part of an effective risk management plan. The plan here means how you respond to the reported potential risks. It details on strategies on how to deal with the various risks - low or high, acceptable or unacceptable. The plan also outlines the role and responsibilities of the team members.
Literally speaking, risk treatment also known as risk control, is that part of the risk management where decisions are made about how to deal with risks either in the external or internal environment. Various options like risk reduction, risk avoidance, risk acceptance and risk transfer.
Before you embark on risk treatment there is something called as risk response planning that needs to be taken care of. It is explained in detail below:
Risk Response Planning
Risk response planning no doubt is an integral aspect of risk treatment. The planning covers discusses and evaluates inputs like risk register, risk profiles and cause control matrix. Strategies are formulated and documented in this stage. The following four different strategies are discussed upon.
Avoiding Risk - Risk avoidance requires identification of the risks first and foremost. This can be achieved through previous project experiences and histories. An analysis is then made upon those that have a tendency to arise upfront at project initiation. Then finally a course of action is arrived upon after assessing the relative impact of the risks.
Transferring Risk - Risk transfer is one of the better means to dilute the impact of the risk. In project management as in finance a risk is often transferred to a third party. It only means the impact of risk is diluted to an extent that event or activity or project for that matter does not suffer a body blow. It also means that a special team outside of the project that bears the impact of the risk.
Mitigating Risk - Risk mitigation is a control process that essentially stops a risk before it starts making an impact and bringing it to an acceptable level. Often a contingency plan is put in place to prevent the risk.
Accepting Risk - Finally, there are certain risks that are unavoidable. This strategy is the best when the risk is low. But there has to be a due plan for the same such as determining when the project will be exposed to the risk and making small adjustments accordingly. A risk that is acceptable can be considered passive since no action at all is taken upon the same.
By the end of risk response planning various risks and the corresponding strategies are documented. A risk register is ready that contains all details vis-Ã -vis the time of occurrence, priority and the people involved in handling the risk. The risks have already classified as either internal or external. Relevant risks are assigned to relevant stakeholders accordingly.