Five strategies for threats (negative risks)
| Strategy | What you do |
|---|---|
| Escalate | Risk is outside your authority — hand it to the right level of management/programme. |
| Avoid | Eliminate the threat entirely (change the plan, remove the cause). |
| Transfer | Shift impact to a third party (insurance, warranties, outsourcing). Risk still exists. |
| Mitigate | Reduce probability or impact to an acceptable level. |
| Accept | Take no action (passive) or set a contingency reserve (active). |
Five mirror strategies for opportunities
| Strategy | What you do |
|---|---|
| Escalate | Opportunity is beyond your authority — raise it. |
| Exploit | Make sure the opportunity definitely happens (the mirror of Avoid). |
| Share | Partner with a third party best able to capture it (mirror of Transfer). |
| Enhance | Increase probability or impact (mirror of Mitigate). |
| Accept | Take it if it arrives, but don't actively pursue it. |
The symmetry
Threat ↔ opportunity pairs: Avoid↔Exploit, Transfer↔Share, Mitigate↔Enhance. Escalate and Accept apply to both.
Qualitative vs quantitative analysis
| Analysis | What it does |
|---|---|
| Qualitative | Prioritize risks subjectively via a probability × impact matrix. Fast, done first, on all risks. |
| Quantitative | Numerically model effect on objectives — EMV, decision trees, Monte Carlo. Done on the high-priority risks only. |
Expected Monetary Value (EMV)
Formula
EMV = Probability × Impact. Threats are negative, opportunities positive. Sum across risks for a contingency estimate; use in decision trees.
Example: a 30% chance of a $10,000 cost overrun → EMV = 0.30 × (−10,000) = −$3,000.
Mistakes examiners test
- Transfer ≠ eliminate. Transferring (e.g. insurance) moves the impact, not the risk itself.
- Mixing Mitigate and Avoid. Avoid removes the threat; Mitigate only reduces it.
- Quantitative on every risk. It's reserved for high-priority risks after qualitative screening.
Test yourself
4 quick questions — tap an answer to check it instantly. Nothing is sent anywhere.
1. Which opportunity strategy mirrors the threat strategy 'Avoid'?
Answer: A. Avoid (threat) mirrors Exploit (opportunity) — make sure the opportunity definitely happens.
2. Buying insurance for a risk is an example of…
Answer: C. Insurance transfers the financial impact to a third party; the risk still exists.
3. EMV of a 30% chance of a $10,000 loss is…
Answer: A. EMV = probability × impact = 0.30 × (−10,000) = −$3,000.
4. Quantitative risk analysis is performed…
Answer: C. Quantitative analysis is reserved for the high-priority risks identified by qualitative screening.
Sources
- Project Management Institute — pmi.org.
- PMI, A Guide to the Project Management Body of Knowledge (PMBOK® Guide).
Study summary only. "PMP" and "PMBOK" are marks of the Project Management Institute, which does not endorse this material.