Risk mitigation is a key part of any business, but it can be overwhelming. LogicManager offers the tools to centralize, automate and enhance your mitigation strategies with modern GRC technology.
The first mitigation strategy is risk avoidance. This involves sidestepping a risk by completely avoiding it. This is most common when the consequences of a risk are deemed too severe.
1. Risk Assessment
Before developing a risk mitigation strategy, it's important to assess the current risks that could harm your company. This step includes identifying potential hazards and their impact on your business assets, including employee safety, critical IT systems, property damage and financial loss.
Vulnerabilities and weaknesses are also analyzed in this stage. These include deficiencies in building construction, process systems, security and loss prevention programs that increase the severity of damage when a hazard occurs.
Once the risks have been identified, they must be prioritized. This will allow you to allocate your resources effectively. Different factors will influence the priority of each risk, such as performance, cost and scheduling.
2. Risk Monitoring
Once a risk mitigation strategy is identified, assessed, and put into place, it needs to be monitored. Monitoring doesn't have to be a formal process, but rather an ongoing research-oriented activity that looks for changes in risks and risk sources.
As with the selection of a risk mitigation strategy itself, monitoring strategies aren't one-size-fits-all. Depending on the nature of your organization, what you consider to be an acceptable level of risk, and other factors, you may monitor certain risks more than others.
In addition to internal and external resources, you can look for information about a particular risk from your competitors, vendors, or other industry events. This information can help you better understand what's happening in the market and how it could impact your business. And it can also help you identify and develop effective monitoring strategies. Having this information will also allow you to keep up with the changing risk environment as it impacts your organization.
3. Risk Transfer
Risk transfer involves shifting a risk from your business to someone else with the goal of minimizing potential loss. Examples of this control approach include insurance policies, indemnification clauses in contracts, and requiring contractors to carry a specific level of liability.
This method can help you protect your company from financial and operational losses while ensuring minimal disruption to operations and a healthy bottom line. However, it is important to remember that risk avoidance may deprive you of vital opportunities.
Regardless of what type of strategy you employ, the overall objective is to bring your risk levels down to a manageable level without impacting your ability to compete and grow. Your specific plan will vary depending on your industry setting, location, and organization. Developing and implementing effective risk mitigation strategies is an ongoing process and should be adapted as your needs evolve. It is also important to remember that not all risks can be eliminated and some must be accepted.
4. Risk Management
When a risk cannot be avoided, accepted or transferred, businesses take actions to lessen its impact. This is called risk mitigation. This can be done by reducing the probability of Regulatory Audits loss or decreasing its severity, such as installing security devices on audio visual equipment to prevent theft, or buying insurance to protect against catastrophic losses resulting from natural disasters.
It is often impossible to predict the likelihood of important risks, so a combination of strategies may be needed to control them. These include risk avoidance or elimination (eliminating the risk entirely), risk transfer or sharing (contracting with a third party to bear the risk) and risk tolerance or acceptance (accepting the risk without taking any risk reduction measures).
Effective risk-management processes must counteract inherent human biases against failure and negative consequences. These include a tendency to attribute faults to others, irrational optimism and tunnel vision, which can lead to underestimating risk or overlooking potential problems. The goal is to create a risk-aware culture in which everyone understands the need for constant scrutiny and active questioning of assumptions, plans and results.
