Risks have become an integral part of the business in emerging & developing markets. In one of the World Economic Forum surveys, experts have explained how the global risk outlook is unsettling the world. The ultimate concern is to take proper risk mitigation actions for long & short-term threats for the business. BCM practitioners need to estimate the probability of risk occurrences and assess the entire business process’s overall impacts before moving forward. They need to create a suitable risk mitigation strategy as per the organization’s risk appetite & tolerance level.
What is Risk Mitigation?
The risk mitigation process allows companies to manage the adverse effects of potential threats or risks. It also reduces the likelihood of risks happening again in the future.
Here are the four effective risk mitigation strategies that increase the success of your business continuity management drive.
Depending on the risks and their consequences, organizations choose their risk acceptance strategy. Selecting this approach is a sensible decision where the cost of dealing with the risks outweighs the impacts of potential damage. Companies often go for this plan when the likelihood of a particular risk is either low or rare. Business continuity management experts recommend keeping those threats monitored despite the risk tolerance as any future changes can cause alteration in risk acceptance.
The risk avoidance approach reduces a higher chance of exposure to some specific threats. It is the exact opposite of risk acceptance. Unlike the first, this strategy takes all the preventive measures to reduce & eliminate all the risk impacts. The effort could be anything related to business processes. This step can be implementing new technology, change of workflow, process addition, or removal. As per experts, it’s time-consuming & expensive business continuity management activity for organizations.
Limitation of threats is a strategic business continuity management move that supports organizations to restrict risk impacts. It helps organizations to understand which risks should be accepted and what needs to be avoided or removed. Companies must identify the risks and their consequences before proceeding further. Upon assessing how these risks impact their finances and operational efficiency, the organization can efficiently limit those threats.
Transfer of Risks
Elimination of threat impacts through transference seems to be a viable strategy for some organizations. Risk transfer in business continuity management refers to handing over the associated risk impacts to third parties. Some companies transfer performance to willing third parties, especially through outsourcing projects. One of the easy and most used methods of transferring risk is insurance.
Deciding Factors for Each Risk Mitigation Strategy
Risk mitigation strategy has a significant influence on the company’s business continuity management drive. Try the below-mentioned methods to know which approach works out best for your organization.
- First, make sure that your organization performs a Threat and Risk Assessment (TRA)
- After assessing threats, involve senior management to decide the company’s risk appetite level and risk tolerance. It would be best if you adopted the risk mitigation strategy accordingly.
- Budget, challenges, market demands, and business processes also need to be considered while choosing a method to minimize the risk impact.
- Taking help from consultants or business continuity management professionals is also a good decision. It would help to decide which strategy works best for your business.
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