Benefit Risk Sharing: Transferring Opportunity Ownership for Project Gain
PMBOK v8 Definition
Risk sharing involves transferring ownership of an opportunity to a third party so that it shares some of the benefit if the opportunity occurs. It is important to select the new owner of a shared opportunity carefully, so they are best able to capture the opportunity for the benefit of the project. Risk sharing often involves payment of a risk premium to the party taking on the opportunity. This strategy is part of the Plan Risk Responses process within the Project Risk Management Knowledge Area.
Why It Matters for the Exam
The PMI exam frequently tests your ability to distinguish between the four opportunity response strategies (exploit, share, enhance, accept). Share is often confused with transfer (which applies to threats), so questions specifically target your understanding of when ownership is transferred to a third party for mutual benefit. Expect scenario-based questions asking you to identify the correct strategy when a partnership or joint venture is described.
Key Points to Remember (for the exam)
- Definition: Sharing transfers ownership of an opportunity to a third party who shares the benefit if it occurs
- Risk Premium: Sharing often involves payment of a risk premium to the party taking on the opportunity
- Key Selection Criteria: Choose the new owner carefully—they must be best able to capture the opportunity
- Common Examples: Risk-sharing partnerships, teams, special-purpose companies, joint ventures
- Overall Project Risk Application: For high positive overall project risk, ownership may be shared to reap associated benefits
- Collaborative Structures: Setting up a collaborative business structure where buyer and seller share overall project risk is a sharing action
- Distinction from Transfer: Transfer is for negative overall project risk (threats); share is for positive overall project risk (opportunities)
Typical PMI Exam Example
A project team identifies a market opportunity requiring specialized expertise the organization lacks. The project manager recommends forming a joint venture with a partner company that will receive a portion of the profits in exchange for managing this opportunity. Which risk response strategy is being applied?
Answer: Share (the opportunity is transferred to a third party who shares the benefit and receives a risk premium).
PMI Exam Traps
- Trap: Confusing "share" with "transfer" → Reality: Share applies to opportunities (positive risks); transfer applies to threats (negative risks). Both involve third parties, but share involves benefit-sharing, while transfer involves risk premium payment for assuming liability.
- Trap: Thinking sharing means equal distribution of all benefits → Reality: The third party shares "some of the benefit," not necessarily equally. The focus is on ensuring the opportunity is captured effectively.
- Trap: Assuming sharing is only for individual risks → Reality: Sharing also applies to overall project risk when the level of positive overall project risk is high and the organization cannot capture it alone.
- Trap: Confusing "share" with "enhance" → Reality: Share transfers ownership to a third party; enhance increases probability/impact of an opportunity while retaining ownership within the project team.
Important PMI Connections
| Related Concept | Relationship Type | Exam Attention Point |
|---|---|---|
| Exploit | Opposite strategy | Exploit makes opportunity happen (100% probability); share transfers ownership to a third party |
| Enhance | Complementary strategy | Enhance increases probability/impact; share transfers ownership to maximize capture |
| Transfer | Opposite (threat vs. opportunity) | Transfer is for negative risks with risk premium; share is for positive risks with benefit-sharing |
| Joint Venture | Implementation example | Exam tests whether you recognize joint ventures as a share strategy, not a transfer strategy |
Quick Review Questions
- A project manager proposes paying a technology partner a premium to take over development of a new feature that could generate significant revenue. What risk response strategy is being applied?
- What is the key difference between the "share" strategy for opportunities and the "transfer" strategy for threats?
- When applying the share strategy to overall project risk, what type of overall project risk must be present?
- Why is careful selection of the new owner critical when applying the share strategy?
- Which of the following is NOT an example of risk sharing: partnerships, joint ventures, insurance policies, or special-purpose companies?
PMBOK v8 Reference
Section 5 – Tools and Techniques (Plan Risk Responses process) – A Guide to the Project Management Body of Knowledge (PMBOK Guide) – Eighth Edition