Risk Sharing is a risk response strategy that involves allocating ownership of an opportunity to a third party that is best able to capture the opportunity or absorb the impact of the threat.
It transfers partial responsibility to another entity through partnership, contracts, or joint ventures, enabling more effective exploitation of positive risks or mitigation of threats when external capability exceeds internal capacity.
Key Characteristics
- Joint Ownership – Involves collaboration or agreement with a third party
- Used for Opportunities or Threats – Applied where shared responsibility yields benefit
- Formalized Through Agreements – Typically defined in contracts, partnerships, or MOUs
- Capability-Driven – Leverages external expertise, resources, or positioning
Example Scenarios
- Entering a strategic alliance with a vendor to co-develop a new product
- Sharing financial risk of market entry with a joint venture partner
- Collaborating with an external firm to capture innovation opportunities
Role in Risk Response Planning
- Expands Capability – Taps into external strengths to manage risk more effectively
- Distributes Risk Exposure – Reduces burden on the project or organization
- Requires Governance – Depends on well-structured agreements and communication
- Aligns Incentives – Ensures mutual benefit through shared ownership and outcomes
See also: Risk Acceptance, Risk Avoidance, Risk Enhancement, Risk Exploiting, Risk Mitigation, Risk Transference.