1-15.5 Risk Response Planning

Once a risk is identified and analyzed, risk response planning is the function of deciding what, if anything, should be done with a risk. The purchase/SCM team should consider the following approaches when responding to the risk:

• Acceptance — accepting the consequences of a risk occurrence without further action, but continuing to observe for increased likelihood of occurrence.
• Risk transfer — transferring some or all of the responsibility for dealing with a risk to the supplier.
• Risk reserve — deciding to use monies set aside as a risk management reserve or risk contingency reserve. As a whole, a risk reserve should be comparable to the probability of costs related to accepted risks and contingency plans that would be implemented, should the risk occur.
• Risk containment — two types of risk containment:
• Risk mitigation — taking steps to affect risk factors to lessen risk by lowering the probability of a risk occurrence or reducing its effect should it occur.
• Risk contingency planning — the development of a risk contingency plan for a particular risk or for multiple risks.

It is important to emphasize that the Postal Service will not be able to control or transfer every risk. On a high level, a risk will fall into one of these three categories, which will affect the Postal Service’s ability to respond:

• Business risk — whatever affects the Postal Service’s ability to meet business objectives. These risks are managed by the Postal Service and cannot be transferred.
• Service/operational risk — includes design/build/finance/operate project risk. These risks are managed by the party best placed to do so. Suppliers and clients share detailed plans for managing risks.
• External risk — beyond your control, such as legislation, changes in marketplace, etc. Suppliers and clients produce and maintain plans for mitigating these risks.