Risk management is an essential element of any business. It doesn’t matter if it’s from natural disasters, seasonal conditions or occupational hazards, businesses have to manage a variety of risks that could threaten the business’s viability and continuity. The stakeholder community expects business leaders to have plans and contingency plans to address these risks. These plans could contain digital resources or specific teams to manage risk, however the best method for business leaders to mitigate risks is to monitor and reevaluate each one.
There are four types of risk mitigation strategies: avoidance control, acceptance and elimination. Avoidance is the method of avoiding a risk when it’s deemed to have too grave consequences. For instance, a firm may not build new offices in an unstable region or decide to not outsource the manufacturing of innovative products to that country.
Control is the second type of risk mitigation strategy. This is the process of taking steps to prevent a threat from happening. This could include identifying costs and the incorporation of them into budgets for projects. It may also require making schedules that are managed to show the timelines of projects and ensure that they stay on schedule.
Elimination is the final type of risk reduction. It involves addressing the danger’s root cause or eliminating it. For instance, if your office break room has an oven that could ignite fire, you could act to eliminate the risk by putting out the fire and stopping it from causing additional damage. In their hurricane-preparation plans hospitals place patients ahead of equipment and buildings.