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According to the PMI Risk Management Professional (PMI-RMP)® Examination Content Outline1, a secondary risk is a risk that arises as a direct result of implementing a risk response to a specific risk. In this case, the risk response is to contract an external vendor to provide additional capacity and expertise to the project team. The secondary risk is the confidentiality risk that the contracts department has identified. The risk manager should assess the secondary risk to determine its probability, impact, and priority, and to plan appropriate responses. This is part of the Perform Qualitative Risk Analysis and Plan Risk Responses processes in the PMBOK® Guide2. References: 1: PMI Risk Management Professional (PMI-RMP)® Examination Content Outline 2: A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Sixth Edition

By hiring a licensed contractor to complete the complex activity, the project manager is transferring the risk associated with that activity to the contractor. This is an example of risk transfer, as the responsibility for managing the risk is shifted from the project manager to the contractor.

According to the PMI Risk Management Professional (PMI-RMP)® Handbook1, one of the domains of the PMI-RMP exam is Risk Response Planning, which involves developing options and actions to enhance opportunities and reduce threats to project objectives1. One of the strategies for negative risks or threats is risk transfer, which involves shifting the impact of a threat to a third party, such as a contractor, a vendor, or an insurer2. In this situation, the project manager is performing risk transfer by hiring a licensed contractor to complete the work that is too complex to complete internally. By doing so, the project manager is transferring the responsibility and liability of the activity to the contractor, who is expected to have the expertise and resources to handle the complexity. The project manager is not performing risk mitigation, which involves reducing the probability and/or impact of a threat2. The project manager is not performing risk acceptance, which involves acknowledging the existence of a threat and making a conscious decision to accept it without taking any action2. The project manager is not performing risk avoidance, which involves changing the project plan to eliminate the threat or protect the project objectives from its impact2. References: 1: PMI Risk Management Professional (PMI-RMP)® Handbook, page 62: A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Sixth Edition, page 436.

The project manager should implement the risk handling strategies for the risks that occur more frequently, as this will help reduce their impact on the project and improve overall project performance.

Exploit is a positive risk response strategy that aims to ensure that the opportunity is realized 1. It involves eliminating the uncertainty associated with a particular upside risk and making it happen 2. For example, if there is an opportunity to reduce the project cost by using a cheaper supplier, the project manager can exploit it by signing a contract with the supplier and securing the savings. Exploit is the opposite of avoid, which is a negative risk response strategy that seeks to eliminate the threat or protect the project from its impact 2.

The other options are not appropriate for taking full advantage of opportunities. Mitigate is a negative risk response strategy that reduces the probability and/or impact of a threat 2. It is the opposite of enhance, which is a positive risk response strategy that increases the probability and/or impact of an opportunity 1. Accept is a risk response strategy that involves acknowledging the risk and not taking any action unless the risk occurs 2. It can be applied to both threats and opportunities, but it does not actively pursue them. Transfer is a negative risk response strategy that shifts the impact of a threat to a third party, along with ownership of the response 2. It is the opposite of share, which is a positive risk response strategy that allocates ownership of an opportunity to a third party who is best able to capture it for the benefit of the project 1.

References: 1: How To Exploit and Enhance Project Opportunities - Project Risk Coach 2 2: A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Sixth Edition, page 443-4451