Monitoring risk responses is a critical aspect of effective risk management, especially in relation to ‘secondary risks’. Secondary risks arise as a direct consequence of implementing a risk response. While these secondary risks may initially appear minor in scope, they can spiral into complex and demanding issues if not properly managed. For instance, in a construction project, the decision to hire less experienced labour to mitigate cost risks might lead to quality and safety issues – secondary risks. This article will explore the importance of monitoring risk responses in relation to secondary risks within the context of the PMI Risk Management Professional (PMI-RMP) exam.
It’s key to understand that it is challenging to eliminate risk completely in any project, and oftentimes the best we can do is to reduce risk to a level that is as low as reasonably practicable. This is why it’s critical to have a strong risk management strategy, one that includes a process to identify, evaluate, and monitor both primary and secondary risks.
1. Understanding Secondary Risks
In the realm of project management, secondary risks are subsequent risks that occur as a direct consequence of implementing a risk response. Arguably, every risk response carries with it potential secondary risks. Monitoring these risks is critical because it ensures these unintended consequences do not escalate and jeopardize project success.
2. The Criticality of Monitoring Risk Responses
Monitoring risk responses involves reviewing and analysing risk triggers, updating risk identification and analysis, and developing additional risk response strategies for newly arisen secondary risks. In any project, risk factors can change constantly, therefore, regular monitoring is necessary to ensure the project remains within acceptable risk parameters.
3. Key Elements of Monitoring Secondary Risks
There are three main steps to monitor secondary risks which include:
- Identify potential secondary risks: When developing a primary risk response, identify potential secondary risks that may arise.
- Document secondary risks: Document all secondary risks to ensure all potential risk triggers are recorded. This record will serve as a reference during the project.
- Monitor and review secondary risks: Finally, continuously monitor and review identified secondary risks. This ongoing task is critical to managing risk response effectively.
4. A Case Study: The Domino Effect of Secondary Risks
Let’s take a software development project as an example. The project is behind schedule, and to bring it back on track, the project manager decides to add more developers to the team – a strategy known as ‘crashing’. This decision, while mitigating the initial ‘schedule’ risk, might lead to secondary risks. These could include lower code quality due to rushed work, increased complexity in team communication due to the increased team size and increased costs due to higher payroll.
In such a scenario, regular monitoring of these secondary risks, such as daily code review sessions, regular team meetings and constant budget monitoring, can help ensure that these do not spiral out of control.
In conclusion, monitoring risk responses for secondary risks is as essential as identifying primary risks themselves. Risk Management Professionals (PMI-RMP) are equipped with the knowledge and skills essential for successful risk management, including the ability to effectively monitor risk responses to manage secondary risks in a project environment. Therefore, understanding the process of monitoring risk responses for secondary risks is a critical part of preparation for the PMI-RMP exam.
Practice Test
True or False: Secondary risks are those risks that occur as a consequence of implementing a risk response.
Answer: True
Explanation: Secondary risks are indeed risks that occur as a direct consequence of implementing a risk response.
What does the term “residual risks” refer to in risk management?
- A) Risks that remain after risk response strategies have been applied
- B) Initial risks that were identified during risk assessment
- C) Risks that become apparent during the project execution
- D) Risks that were not identified during the project initiation phase
Answer: A) Risks that remain after risk response strategies have been applied
Explanation: Residual risks are those which still linger even after risk response strategies have been applied.
Monitoring secondary risk responses is:
- A) An ongoing process throughout the lifecycle of the project
- B) Performed only after the project is completed
- C) Not necessary as it does not impact the project
- D) Initiated at the start of the project
Answer: A) An ongoing process throughout the lifecycle of the project
Explanation: Risk response monitoring is an iterative process that takes place throughout the entire project lifecycle.
What is the primary purpose of monitoring secondary risks?
- A) To evaluate the effectiveness of the risk response plan
- B) To identify new risks that might appear once a risk response has been implemented
- C) To monitor the cost of the project
- D) Both A and B
Answer: D) Both A and B
Explanation: The purpose of monitoring secondary risks is to assess whether the implemented risk responses are effective and to identify any new secondary risks that may arise as a result of the risk responses.
True or False: Secondary risks can have a greater impact on the project than the original identified risks.
Answer: True
Explanation: It is possible that secondary risks could have a greater impact than the initially identified risks; therefore, they must not be overlooked in the risk management process.
If no secondary risks are identified, there is no need to monitor the risk response.
- A) True
- B) False
Answer: B) False
Explanation: Even if no secondary risks are identified, monitoring the risk response is crucial to ensure that the risk management plan is effective and to catch any changes in risk profile.
When is a comprehensive review of the secondary risks typically performed?
- A) Before implementing a risk response strategy
- B) After implementing a risk response strategy
- C) As part of the risk identification process
- D) During risk assessment
Answer: B) After implementing a risk response strategy
Explanation: A comprehensive review of the secondary risks is typically performed after the implementation of a risk response strategy to assess the efficacy of the strategy and to identify any new risks that have surfaced.
True or False: Secondary risks are always less severe than primary risks.
Answer: False
Explanation: Secondary risks can be of varying severity and could potentially be more severe or have a bigger impact than primary risks.
Typically, risk owners are responsible for:
- A) Identifying new risks
- B) Monitoring identified risks
- C) Updating the risk register
- D) All of the above
Answer: D) All of the above
Explanation: Risk owners are typically responsible for identifying and monitoring risks, and updating the risk register.
Secondary risks are generally a result of:
- A) Poor risk management
- B) Implementing risk response
- C) Inaccurate risk identification
- D) Insufficient risk assessment
Answer: B) Implementing risk response
Explanation: Secondary risks are not due to poor risk management or inaccurate risk identification or insufficient risk assessment. They are, instead, risks that occur as a result of implementing a risk response.
Interview Questions
What is the concept of secondary risks in risk management?
Secondary risks are those risks that occur as a direct result of implementing a risk response. They are not primary risks but are caused only when actions taken to mitigate a primary risk have unforeseen consequences.
What is the importance of monitoring secondary risks in every risk response plan?
Monitoring secondary risks in every risk response plan is critical to maintaining the overall integrity of the project, as these risks could disrupt the project timeline and increase project costs if left unchecked.
How can the Project Management Institute’s risk management professional best monitor secondary risks?
To best monitor secondary risks, the PMI Risk Management Professional should review and reassess the risk register frequently during the project lifecycle and adjust risk response strategies as necessary.
Is tracking secondary risks different from primary risks?
Yes, tracking secondary risks requires actively monitoring the outcomes of implemented risk responses to observe if they lead to the creation of any new risks. It’s an extra layer of vigilance beyond what’s required for tracking primary risks.
In the context of the PMI-RMP exam, what tools are commonly used to monitor secondary risks?
The tools that are commonly used to monitor secondary risks include but are not limited to: Risk registers, Risk reports, and Project Management Information Systems (PMIS).
Why is the Interactive Communication method important in monitoring risk response for secondary risks?
Interactive Communication allows all stakeholders to engage in real-time discussions about risk responses, leading to quicker identification and clearer understanding of secondary risks that may occur.
How is a risk register used to monitor secondary risks?
A risk register is updated with information regarding secondary risks as and when they occur. This includes details on the risk event, the likelihood of occurrence, the potential impact, and proposed responses.
In the PMI-RMP exam context, why is the use of a Project Management Information System (PMIS) recommended for monitoring secondary risks?
A PMIS can facilitate real-time monitoring of risk responses and effectively track any secondary risks that emerge. It also promotes transparency, as stakeholders can view and update the status of risks in a centralized platform.
What is the role of an issue log in monitoring secondary risks?
An issue log can be used to record the details of secondary risks when they turn into actual issues. It helps track the resolutions and facilitates communication between team members dealing with the issue.
Why is continual reassessment crucial in monitoring risk response for secondary risks?
Continual reassessment allows for early detection of secondary risks and their potential impacts. It provides an opportunity to adjust strategies and take appropriate actions before secondary risks escalate.
What is a risk breakdown structure (RBS), and how is it used in monitoring secondary risks?
A Risk Breakdown Structure categorizes potential risks into hierarchical levels. In monitoring secondary risks, an RBS helps identify these risks within specific categories, making it easier to monitor and manage them.
According to PMI, what is the impact of secondary risks on a project’s stakeholder engagement?
Secondary risks can impact stakeholders’ perception of the project’s viability and timeline. Therefore, active engagement and clear communication about these risks and their handling can maintain stakeholders’ confidence.
How does the Plan Risk Responses process correlate to secondary risks?
During the Plan Risk Responses process, potential secondary risks should be anticipated and planned for. This includes identifying triggers, possible impacts, and developing appropriate response strategies.
What is the benefit of including lessons learned in monitoring secondary risks?
Incorporating lessons learned from past projects or risk responses can help anticipate potential secondary risks and improve the risk response planning and implementation.
According to the PMI-RMP exam, what are some typical secondary risk indicators?
Some typical secondary risk indicators according to PMI-RMP includes changes in project scope, schedule or budget overruns, or disparities in stakeholder perceptions and expectations about the project risk.
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