Residual Risk Vs Secondary Risk

Residual Risk Vs Secondary Risk

Last updated on 10th Oct 2020, Artciles, Blog

About author

Sundar (Sr Project Manager )

Highly Expertise in Respective Industry Domain with 10+ Years of Experience Also, He is a Technical Blog Writer for Past 4 Years to Renders A Kind Of Informative Knowledge for JOB Seeker

(5.0) | 14585 Ratings 1906

Residual Risks

You have identified a risk and developed a response plan to manage this risk. However, this response plan does not completely remove the risk. The residue remains, which is called residual risk.

According to the PMBOK Guide 6th edition, “residual risks are those risks that are expected to remain after the planned responses of risks have been taken, as well as those that have been deliberately accepted.”

Subscribe For Free Demo

Error: Contact form not found.

Example of a Residual Risk

  • Let’s say you have identified a risk that it may rain for one to two hours. Therefore, you have created a contingency plan to manage this risk.
  • But what will happen if the rain falls for more than two hours?
  • You will develop a fallback plan. 
  • This is an example of residual risk.
  • As a project manager, you should ensure that residual risks are evaluated properly. If it is a low priority, you should keep it on the watch list. For high priority risks, you will develop a risk response plan to mitigate their impact. 
  • Please note that for all risks, if the trigger hits, you will implement the response plan. This plan can be either a contingency or a fallback plan.
  • For a primary or secondary risk, you will implement the contingency plan, and for residual risk, you will implement the fallback plan.
  • You will use the contingency reserve if any of these risks occur, not the management reserve. The contingency reserve is used for identified risks and the management reserve is used for unidentified risks.

Secondary Risks

  • A risk is an uncertain event and if it occurs it can affect your project objectives.
  • You will develop a risk response plan so you can either avoid or mitigate the impact. Often, this response can create a new risk. This new risk is a secondary risk.
  • According to the PMBOK Guide 6th edition, “secondary risks are those risks that arise as a direct result of implementing a risk response.”
  • Simply put, you have developed a response plan for risk and this caused a new one. This is known as a secondary risk.

Example of Secondary Risks

  • Let’s say you have excavated a trench to stop animals from walking through your land. However, during the night, a traveler passing by falls into the trench.
  • This is an example of a secondary risk.
  • If your response plan creates a secondary risk, you will analyze it and develop a risk response plan, if required. 
  • If the impact is very low, you will keep it on the watch list.

Below are the differences between residual risks and secondary risks

  • Secondary risks are those that arise as a direct outcome of implementing a risk response. On the other hand, residual risks are expected to remain after the planned response of risk has been taken.
  • Contingency plans are used to manage primary or secondary risks. Fallback plan is used to manage residual risks. (Note that if an identified risk occurs, you will implement the contingency plan, and if it becomes ineffective, you will implement the fallback plan.)
  • Since the residual risks and secondary risks are identified risks, you will use the contingency reserve to manage them. (Not the management reserve because it is used for unidentified risks).
  • If the residual risks and secondary risks do not require a response plan, you will monitor them.

Residual Risk vs Secondary Risk

  • Residual Risk : the risk(s) that remains after carrying out the risks response or those risks that are accepted without any risk responses (maybe the cost for the risk response is more than the cost of dealing with it)residual risks must be identified and documented during the risk management process a contingency reserve should be set up to tackle these risks should these kinds of risks arise.
  • Secondary Risk : the risk(s) that are created directly owing to the implementation of a risk response for primary risks.
    1.since every activity involves risks – the risk responses themselves are no exception, implementation of a risk response will result in new risks for the project.
    2.a risk response plan would need to be planned and implemented to tackle this kind of risk.
    3.secondary risks may be accepted without further actions if their impact is small on the overall project objectives.

Below are the differences between residual risks and secondary risks

  • Secondary risks are those that arise as a direct outcome of implementing a risk response. On the other hand, residual risks are expected to remain after the planned response of risk has been taken.
  • Contingency plan is used to manage primary or secondary risks. Fallback plan is used to manage residual risks. (Note that if an identified risk occurs, you will implement the contingency plan, and if it becomes ineffective, you will implement the fallback plan.)
  • Since the residual risks and secondary risks are identified risks, you will use the contingency reserve to manage them. (Not the management reserve because it is used for unidentified risks).
  • If the residual risks and secondary risks do not require a response plan, you will monitor them.

Residual Risk vs Secondary Risk

1.Residual Risk : the risk(s) that remains after carrying out the risks response or those risks that are accepted without any risk responses (maybe the cost for the risk response is more than the cost of dealing with it)

  • residual risks must be identified and documented during the risk management process
  • a contingency reserve should be set up to tackle these risks should these kinds of risks arise

2.Secondary Risk : the risk(s) that are created directly owing to the implementation of a risk response for primary risks

  • since every activity involves risks — the risk responses themselves are no exception, implementation of a risk response will result in new risks for the project
  • a risk response plan would need to be planned and implemented to tackle this kind of risks
  • secondary risks may be accepted without further actions if their impact are small on the overall project objectives
Pega Sample Resumes! Download & Edit, Get Noticed by Top Employers! Download

Example

1.When planning the study schedule for your exam, the primary risks that may affect your study schedule are:

  • suddenly be fully engaged with a new project during exam prep that leaves no time for studying
  • fall ill during exam prep
  • change of the exam syllabus

2.One risk response activity for not finding enough study time owing to professional engagement would be to begin the exam prep in a low season (i.e. avoid the peak seasons) by taking reference to the work pattern for the previous years.

  • The residual risk for this risk response would be: an unexpected large-scale project comes up during your exam prep. In that case, you may need to set aside budget (a “known unknown” — from contingency reserve) to postpone your PMP® Exam in order to find enough time for studying.

3.The risk response activity for avoiding falling ill during exam prep would be taking vaccination for five of the most common contagious disease at the time of exam prep.

  • The secondary risk for this risk response would be the vaccines themselves may cause side effects (including prolonged fatigue or headache) or even cause infection. A risk response plan may need to be created for this secondary risk.
  • As there are countless variety of germs/toxins that can cause illnesses, the 5 vaccines taken may just be able to protect you against a portion of the most common diseases. You can still be exposed to some less common diseases — this is the residual risk.

Are you looking training with Right Jobs?

Contact Us

Popular Courses