It’s not enough just to identify risks that could harm your project. Once you find a risk, you must analyze it and decide how you will respond. For example, if your data center is in the Midwest, it is a legitimate possibility that a tornado could sweep through the area and destroy your servers. There are many routes you can take to deal with this so that the impact on your project is as small as possible. Here are the four most common risk responses:
Avoid
Let’s return to the data center example. If you, a project or risk manager, want to reduce the impact of a tornado hitting your data center, you might choose avoidance. This would mean removing your data center from the area where it could be vulnerable to a tornado. Instead of housing the data center in the Midwest, you could move it to Syracuse, NY, which was once name the safest U.S. city from natural disasters (Top 10 Safest U.S. Cities from Natural Disasters – CBS News).
Mitigate
If you cannot eliminate the threat of a tornado wreaking havoc on your data center but want to have a solid plan should the risk be realized, you can look to mitigate the risk, or taking steps to reduce its impact. A mitigation strategy for this example would be to set up a second data center that acts as a backup in the event that the primary data center goes down.
Transfer
If avoidance and mitigation are not the solutions for your risk, perhaps the answer is transference. This is transferring the risk to a third party to handle. For example, you could enter a contract with another company to pay them to house your data center and if anything happens, they are responsible. Risks can also be transferred to insurance companies who can cover the costs of damage after the fact but saves a lot of the immediate financial burden.
Accept
In the event that your data center is located in Syracuse, NY, natural disasters might not be a big concern for your project. In that case, you could decide to accept the risk and deal with the consequences.
In all cases, it is a good idea to have a contingency plan for the risks in case they occur, regardless of the decided risk response. This plan details the resources available to deal with the risk and the actions that will be taken to remedy the situation.
Further Reading
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