Introduction to Types of Risk

Introduction to Types of Risk: Secondary Risk vs Residual Risk

Several questions on the Project Management Professional (PMP)® exam test your ability to manage and identify risks. But did you know there are several different types of risks? In this article, we’ll introduce you to two less-talked-about risks: secondary and residual risks. We’ll discuss why they need to be addressed along with the initial risks.

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Understanding Secondary Risk for the PMP Exam

According to PMI’s PMBOK® Guide, the definition of a secondary risk is:

“The risks that arise as a direct result of implementing a risk response to a specific risk.”

In short, the secondary risk is a new risk that comes from responding to the initial risk.

Examples of Secondary Risks

Below are two examples of secondary risks that can help you study for the PMP® exam. The first one is a minor risk that students everywhere take. The second example is just one of many secondary risks that can come from redoing a house.

Example 1: Let’s say you’re a project management student studying for the PMP exam. You reduce the risk of not passing by staying up all night to study. But this increases the risk of falling asleep on the bus and missing the exam entirely. This new risk is the secondary risk. On a side note, we do not advise you pull an all-nighter the day before the PMP exam. Good study habits in advance and a good night’s sleep are always best!

Example 2: You buy an old townhouse and decide to replace the carpet with hardwood floors. This decreases the risk of mold and allergies; however, once the wood floors are installed, there is now the secondary risk of someone slipping and hurting themselves on the new floors.

Understanding Residual Risk for the PMP Exam

According to the PMBOK® Guide, the definition of residual risk is:

“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.”

Basically, even after doing your best to respond to a risk, there might still be risk left over.

Secondary Risk vs Residual Risk on the PMP Exam

Examples of Residual Risk

Residual risks are related to the initial risk. This means you might only need to add an extra step to your initial response. In the examples below, you have a choice. You can accept the residual risk or find ways to mitigate them.

Example 1: You grab a sweatshirt on your way out in the morning. It’s chilly in the office, and you want to reduce the risk of getting a cold. However, the weather forecast could change. Maybe the temperature will drop, or it could start raining. In both these cases, your sweatshirt won’t be enough.

Example 2: You’re planning an event and the forecast says that it will rain for the first two hours of the event. You bring umbrellas and tarps, but what happens if it continues to rain after two hours? The residual risk that the rain won’t stop may not need any response since you’re already prepared for rain.


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Secondary Risk vs Residual Risk for the PMP Exam

Secondary risk and residual risk might seem similar, but they aren’t. Residual risks are related to the initial risk. On the other hand, secondary risks have nothing to do with the initial risk – they come from the response to it. Comparing secondary risk vs. residual risk is a concept you’ll need to understand if you plan to take the PMP exam.

Difference Between Secondary Risk and Residual Risk

  • Residual risks are directly related to the initial risk; secondary risks are not
  • You need to wait before responding to a secondary risk
  • You can plan for residual risks
  • Residual risks don’t always need a response
  • Secondary risks usually require a response

Similarities Between Secondary Risk and Residual Risk

  • Both secondary and residual risks are identified risks
  • They will both need monitoring if you choose not to respond
  • Both types of risks can be unpredictable
  • Most of the time, you can’t stop secondary and residual risks from happening

Summary

Understanding secondary vs. residual risk will help you prepare for the PMP exam. Anytime you respond to a risk, a secondary risk could pop up, meaning you’ll have to respond to them as they happen. Residual risks, on the other hand, are built into the initial risk. Therefore, you can deal with them by having a backup plan to your backup plan. Are you still feeling shaky about the difference between secondary and residual risk? Project Management Academy can help you prepare for the PMP exam with training courses and practice questions.

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Erin Aldridge, PMP, PMI-ACP, & CSPO
Director of Product Development at | + posts
Erin Aldridge, PMP, PMI-ACP, & CSPO