Risk mitigation – that is, taking steps to reduce the exposure your organization has to risks you’ve identified – is crucial to any organization. The question is how to mitigate your risks, because organizations can employ any number of strategies to do so. Some of those strategies might be excellent fits with your business model; others, less so.
This article will explore 10 proven risk mitigation strategies to help organizations effectively manage and minimize risk exposure. First let’s clarify all the terms we’re using here.
Risk Management vs. Risk Mitigation
Risk management and risk mitigation are essential concepts in managing possible risks for a business or organization, but they’re also distinct concepts; people shouldn’t use the terms interchangeably.
Risk Management
Risk management is the overall process of identifying, assessing, and controlling risk within a company or organization. This involves the identification and analysis of potential risks, as well as the implementation of a plan for managing business risks. Risk management includes creating a business continuity plan, which outlines how to manage an unexpected event.
Risk Mitigation
Risk mitigation focuses on minimizing the harm of a particular risk. This may involve taking measures to reduce the likelihood of the risk occurring, or it may involve developing contingency plans to minimize the harm if the risk does occur. For example, a company may invest in cybersecurity measures to mitigate the data breach risk or develop a contingency plan to respond quickly to a natural disaster.
10 Risk Mitigation Strategies to Consider
When managing risks in any business or project, it’s essential to have a robust risk mitigation plan in place. Here are 10 common risk mitigation strategies.
- Risk acceptance. Risk acceptance acknowledges a risk and accepts its potential consequences without taking further actions to mitigate or eliminate it. This approach is appropriate when the likelihood and impact of the risk are both low, and the cost of addressing it outweighs the potential benefits.
- Risk avoidance. This approach completely avoids the activity that carries the potential risk. For instance, if a customer has a history of defaulting on loans, lending money to that person poses a serious credit risk. To avoid it, an entity may decide to decline the customer’s loan application. This approach is suitable when the potential impact of the risk is high and the cost of mitigating it is significant.
- Risk transfer. As the name suggests, risk transference transfers the risk to another party when accepting or avoiding the risk yourself is not feasible – say, purchasing an insurance policy to cover the costs of a data breach. This approach is suitable for risks with a high potential impact and significant mitigation costs. It can, however, result in additional costs, and should be implemented after thoroughly evaluating risks and costs.
- Risk sharing. In this approach, business partners, stakeholders, or other third parties share the risk. If the risk then happens, the responsibility or loss will not fall solely on one party. This approach suits risks with a significant potential impact that cannot be avoided. It’s important to establish clear agreements and communication channels in advance to assure effective risk sharing and minimize the potential for disputes.
- Risk buffering. Buffering is the act of adding extra resources, time, or personnel to mitigate the potential impact of a risk. For example, implementing redundant servers or backup systems can reduce the risk of a critical system failure.
- Risk strategizing. Risk strategizing involves creating a contingency plan or “Plan B” for certain risks. For example, if the project’s size makes risk management a challenge, developing an alternative plan to manage the project in smaller segments can reduce potential risks.
- Risk testing. Risk testing is the performance of tests (usually many tests) to verify that a project is secure and functions as intended. Make sure you complete the testing phase to meet deadlines and avoid vulnerabilities that threat actors may exploit. A comprehensive risk testing program should include various techniques, such as vulnerability assessments and code reviews, to identify and remediate potential security issues.
- Risk quantification. Accurately quantifying risks allows an organization to determine the potential financial implications of a risk event. This information is critical for making informed decisions about risk transfer through insurance purchases or risk sharing among stakeholders. Moreover, quantifying risks helps you to prioritize them in the risk register based on their potential impact; that allows you to allocate resources more effectively.
- Risk reduction. Risk reduction is the implementation of risk controls to mitigate potential hazards or bad outcomes that may arise during a project or with an enterprise. Reduction helps to enhance the safety and security of the projects and the organization by identifying and addressing potential risks before they become significant.
- Risk digitization. Risk digitization uses digital tools and technologies to transform how businesses recognize, evaluate, control, and reduce risks. This involves integrating digital solutions that provide features such as machine learning, data analytics, automation, and artificial intelligence to enhance the efficacy of risk management systems.
RiskOptics Is Your Risk Mitigation Solution
Incorporating risk management into your organizational culture is key to assuring smooth operations and risk prioritization. That said, approaching risk management with manual processes is a risk unto itself; there are simply too many ways to overlook or mishandle critical steps and introduce error.
To manage cybersecurity and operational risks effectively, modern organizations need robust, automated, data-driven technology. In other words, simplify your risk management process with the RiskOptics ROAR Platform.
ROAR provides a complete overview of control environments, quick access to information for risk assessment, and ongoing compliance monitoring procedures to manage risk management programs effectively.
Book a demo now and see how the RiskOptics ROAR Platform can assist you in risk mitigation.
