2 June, 2022

What is a Residual Risk & What is Secondary Risk? | Video

By Mike Clayton

2 June, 2022

inherent risk, residual risk, risk, risk management, secondary risk, video

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.

Residual 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.

Secondary 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.

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Mike Clayton

About the Author...

Dr Mike Clayton is one of the most successful and in-demand project management trainers in the UK. He is author of 14 best-selling books, including four about project management. He is also a prolific blogger and contributor to ProjectManager.com and Project, the journal of the Association for Project Management. Between 1990 and 2002, Mike was a successful project manager, leading large project teams and delivering complex projects. In 2016, Mike launched OnlinePMCourses.
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