MITIGATION OF RISKS

A business that doesn’t plan for?risk?and take measures to mitigate it is a business living on borrowed time. Risk mitigation is an essential business practice of?developing plans?and taking actions to reduce threats to an organization.?

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The threats to a business operation are numerous. A recent example is a?ransomware attack?that shut down Colonial Pipeline’s fuel distribution system. Natural events such as hurricanes, wildfires, and tornadoes can disrupt, shut down or damage a company. Many organizations have plans in place to address a violent attack in the workplace. And the?COVID-19 pandemic?is a golden example of a health risk that impacted almost every industry on the globe.

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Some risks can’t be avoided. Therefore, companies need to have a risk mitigation plan to confront various?threats, repair the damage, and restore operations. So, what is risk mitigation, what is the goal of risk mitigation, and what are risk mitigation examples??

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WHAT’S IN A RISK MITIGATION PLAN?

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The essential components of an effective risk mitigation strategy are identifying likely risks, prioritizing risk preparation and responses, and monitoring and updating the risk mitigation plan.?

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(1)?????????Identify possible risk events – An organization should consider natural threats based on their location and potential risks to data, operations, and personnel.?

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(2)?????????Make a risk assessment – Evaluate the potential of the risks identified. A risk assessment includes what measures, controls, and processes are needed to reduce the effect of a threat coming to fruition.?

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(3)?????????Prioritize Risks – Rank risks by their severity and potential impact on the operation. Ranking risks also help an organization determine the number of resources to devote to addressing each potential threat.

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(4)?????????Track Risks – Monitor risks as they evolve and evaluate the risk mitigation plan’s ability to address them.

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(5)?????????Implement Actions And Assess Progress – Continually evaluate the risk mitigation plan’s ability to address evolving risks and revise the plan accordingly.?

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WHAT IS RISK MITIGATION: TYPES OF RISK MITIGATION STRATEGIES

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Just as there are various types of risk, different companies have different tolerances and approaches to dealing with threats to their business. Here are some handling options for risk management:

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(1)???????????Risk Avoidance – An organization avoids investments or operations in areas with too significant a risk or cost.?

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(2)???????????Risk Acceptance – Operating with an understanding that some risk will occur in one area so the organization can prioritize mitigating or profiting in other areas.??

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(3)???????????Risk Transfer – The process of allocating a portion of risk to a third party. An insurance policy is one example.?

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(4)???????????Risk Monitoring – Watching for changes in risks and their potential impact on an organization.?

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WHAT IS RISK MITIGATION: RISK MITIGATION BEST PRACTICES

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In addition to the risk handling options listed above, here are some best practices for risk mitigation:

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1.????????????Determining Mitigation Plans – Decision-makers are generally in charge of accepting and avoiding risk. But because identifying and addressing risks is an organization-wide endeavour, a risk mitigation strategy should be a mission decision. Also, leaders need to recognize that risks recur, and plans to address them need to be ready.?

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2.????????????Mitigation Plan Content – Select a risk manager with the resources, knowledge, and authority to implement the risk mitigation plan. The plan should answer:?

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(i)??????????????What actions are required?

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(ii)????????????When must these actions be accomplished?

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(iii)???????????Who is responsible for taking action?

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(iv)???????????What resources are needed??

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(v)???????????How will the action reduce the risk’s probability or severity?

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3.????????????Develop A Contingency Plan – High risks may necessitate having a contingency plan on hand if the initial actions fail to provide adequate mitigation. Also, include a trigger or timeline for implementing a contingency plan. One example would be having to evacuate operations and set up in another location.?

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4.????????????Evaluate The Status Of Each Action – Determine when each step needs to be implemented and completed.?

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5.????????????Monitoring Risk – It’s incumbent on an organization to track evolving threats and amend strategies and actions as necessary. In addition, continually reassess the organization’s risk exposure.?