Generally, risks are recognized as threats to project success. But risks are also used positively by organizations for efficient, effective project success.In Risk Management processes, Risk response planning process plays important role.
Risk Response Planning is the process of developing various options, strategies and actions to enhance or exploit opportunities and to reduce or eliminate threats to project objectives.
Different risk strategies are used to reduce(or enhance) the probability/impact of the identified or even unidentified/unknown risks. In certain situations, risk management team uses acceptance strategy for known risks as the option based on analysis. As a general rule, all unknown(residual) risks follows acceptance strategy as no information available about them & team will deal with those risks as they occur.
Acceptance strategy can be either passive or active. Passive acceptance requires no action except to document the strategy, leaving the project team to deal with the threats or opportunities as they occur. The active acceptance strategy is to establish a contingency plan, contingency reserve, including amounts of time, money, or resources to handle known or even sometimes potential unknown, threats or opportunities.
Contingency plan describes various specific actions that will be taken if the opportunity or threat occurs. These actions are carried out at the time of risk occurrence. So, these options should be time bound. This is mainly created for active acceptance.
Fallback plan is important in Risk Response Planning. When the contingency plan for a risk is not fully effective, team should implement fallback plan.