Managing Single Point of Failure Risks

Managing single point of failure risks
Previously, you learned how to use various tools and strategies to identify and manage risks as you plan
your project. In this reading, we will discuss how to manage risks with the highest potential of impacting
your project.
Single point of failure risks

Once you have identified your risks and ranked them, give special attention to the risks that could have a
catastrophic effect on your team’s ability to complete the project. A single point of failure is a risk that, if
it were to materialize, could cause a significant amount of disruption to your project and could even shut it
down. You should plan for these risks early on in the project.
For example, a lot of projects use subject matter experts (SMEs)—team members with a deep
understanding of a particular job, process, department, function, technology, machine, material, or type of
equipment. SMEs are involved to advise you throughout the project life cycle. Having only one SME familiar
with a critical system on your team is an example of a single point of failure risk. This SME will only offer
one perspective, and if they are the only person advising on the system, there is no one to offer another
perspective.
Case study: Using mitigation strategies to manage single

point of failure risks
Let’s imagine that Office Green uses plant seeds from a company in South America for the majority of its
offerings. The plants produced by these seeds are in high demand by Office Green’s customers. However,
the local government on the suppliers’ end just announced that it would be imposing a new tax on the
exporting of seeds and produce. As a result, the price of the seeds suddenly becomes so high that it is
difficult for the company to supply the seeds to Office Green, putting the project at risk of not having these
seeds available to purchase.
Let’s look at how these four risk mitigation strategies can be used for managing single point of failure risks
in the Office Green example:
Avoid
This strategy seeks to sidestep—or avoid—the situation as a whole. In the Office Green example, the team
could avoid this risk entirely by considering using another seed that is widely available in several locations.
Minimize
Mitigating a risk involves trying to minimize the catastrophic effects that it could have on the project. The
key to minimizing risk starts with realizing that the risk exists. That is why you will usually hear mitigation
strategies referred to as workarounds. What if the Office Green team decided to use both the original South
American supplier and another supplier from a neighboring country? More than likely, the change in
taxation and regulation wouldn’t affect both companies, and this would provide Office Green some
flexibility without having to completely eliminate their preferred supplier.
Transfer
The strategy of transferring shifts the responsibility of handling the risk to someone else. The Office Green
team could find a supplier in North America that uses the seeds from several other South American
countries and purchase the seeds from them instead. This transfers the ownership of South American
regulatory risks and costs to that supplier.
Accept
Lastly, you can accept the risk as the normal cost of doing business. Active acceptance of risk usually
means setting aside extra funds to pay your way out of trouble. Passive acceptance of risk is the “do
nothing” approach. While passive acceptance may be reasonable for smaller risks, it is not recommended
for most single point of failure risks. It is also important to be proactive and mitigate risks ahead of time
whenever possible, as this may save you from having to accept risks. In the Office Green scenario, the
project manager could schedule a meeting with project stakeholders to discuss the increase in South
American taxes and how it could impact the project cost. Then, they might decide to actively accept the
risk by setting aside additional funds to source the seeds from another supplier, if necessary, or to
passively accept the risk of not receiving the seeds at all this season.
Key takeaway
If you have strategies you can rely on for avoiding, minimizing, transferring, and accepting project risks—
including single point of failure risks—you will be in a better position to protect your project from the
possible impact of these risks.

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Case study: Using mitigation strategies to manage single

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