In this video, I answer the questions what is Residual Risk and what is a Secondary Risk? And along the way, we also need to understand the term Inherent Risk too.
This video is safe for viewing in the workplace.This is learning, so, sit back and enjoy
There are three terms we need to get to grips with. The story of residual risk and secondary risk starts with Inherent Risk:
Inherent Risk, or Underlying Risk
This is the risk level you start with, before you take any action to control it. If you do nothing, the risk is the inherent risk.
However, if you do act, you may not remove all of the inherent risk. The risk that remains is the residual risk. So, the residual risk is the risk remaining after you have implemented your risk response.
If you make no response (Risk Acceptance), then:
Residual Risk = Inherent Risk.
As well as resolving or mitigating a specific risk, a risk response can also have secondary, undesirable outcomes. These may be issues you need to deal with. Or it may generate risks: a Secondary Risks.
A Secondary risk is a risk that arises as a direct result of implementing a risk response.
Ideally, when you plan your risk response, you will foresee these secondary risks and issues. That way you can make an informed decision about the effectiveness of your risk response option.
Why does Residual Risk and Secondary Risk matter?
Once you have applied a risk response, it is wise to review the situation, to identify any residual or secondary risks – and to update your risk register accordingly.
Residual Risks need to remain in your risk register, with a fresh evaluation of their new impact, likelihood, and proximity. Thus you need to evaluate the next level of risk response (or decide to accept the residual risk or handle it with a contingency plan).
And, of course, you will add any secondary risks to your register, as you would for any new risk you identify.
Thus, risk management is an adaptive, iterative process. As I like to say:
‘All Project Management is hybrid Project Management’
How Much does this matter?
Good question. The bottom line is that this level of detail is secondary stuff (pun not intended – but enjoyed nonetheless). But, it should become part of your standard process for risk management.
Get the Kindle Exclusive 2nd Edition of my best-selling book on project risk management, Risk Happens!
Carefully curated video recommendations for you:
- Project Risk Management – How to Manage Project Risk | Video
- How to Create a Risk Management Plan | Video
- What to Put in Your Risk Register (Risk Log) | Video
- 4 Types of Project Risk – Different Forms of Uncertainty | Video
- Risk Management – 5 Tips to do it right | Video
- What is Risk Tolerance? | Video
- 10 Step Risk Management Kick-off for Your Project
- Ultimate Guide to Project Risk Management
- Indispensable Guide to the Sources of Project Risk
- The Project Manager’s Guide to Simple Risk Analysis
- Risk Response Strategies: Full & Revised Roundup
What Kit does a Project Manager Need?
I asked Project Managers in a couple of forums what material things you need to have, to do your job as a Project Manager. They responded magnificently. I compiled their answers into a Kit list. I added my own.
Note that the links are affiliated.
Learn Still More
For more great Project Management videos, please subscribe to the OnlinePMCourses YouTube channel.
If you want basic Management Courses – free training hosted on YouTube, with 2 new management lessons a week, check out our sister channel, Management Courses.
For more of our Project Management videos in themed collections, join our Free Academy of Project Management.
For more of our videos in themed collections, join our Free Academy of Project Management.What is a Residual Risk & What is Secondary Risk? | Video Click To Tweet