What Is Risk Mitigation? [2021 Definition & Meaning Guide]

Risk mitigation is defined as the process of reducing risk exposure and minimizing the likelihood of an incident. It entails continually ... Skiptocontent WhatIsRiskMitigation? WhatIsRiskMitigation?[2021Definition&Guide]Lifeisadelicatebalanceoffiguringoutwhatwecanandcannotcontrol.Itiscompletelynaturaltowanttofeelsomesortofcontroloverourlives;it’sactuallyaninnateandfundamentalneed.Ifwedidn’ttrytocontroltheworldaroundustosomedegreeandsimplyallowedlifetohappentous,wewouldneversurvive. Evenoncewe’vedeterminedwhetherornotsomethingisbeyondourcontrol,it’sdifficulttochoosetheactionsandbehaviorsneededtoachievetheresultswewant.Therearetimeswheresittingbackanddoingnothingleadsusrightwherewewanttobe,andthereareothertimeswhereinactionsetsusbackirreparably.Theonlywaytomakeaninformeddecisionistoapplywhatyou’velearnedfromthepast,examineallsidesofeachchoicefromvariousperspectivesandaccountforresidualimpacts. Whilethereisrarelyaperfectsolutionforanything,puttingsubstantialeffortintoastrategyforpreventingnegativeoutcomesusuallyyieldspositiveresults.Forethoughtandduediligence,attheveryleast,enablesmoreoptionsthanjust“majorfailure.”Withthatinmind,takingarisk-basedapproachisasmartwaytonavigatethecomplexitiesoflife. Thesamelogiccanbeappliedtomanagingyourbusiness.Risk-baseddecisionsinanorganizationareoftenmadeconsideringtheconsequencesofinactionortakingaparticularaction.However,implicitriskmanagementisnotenough.Onlywhenyourriskmanagementprogramisastrategicandformalizedprocesswillitenableyoutoimaginetheunimaginableandprepareforwhat’stocome. Sohowcanyoustayvigilantenoughtocontrolrisksthattoucheveryprocessineverydepartment? TableofContents WhatIsRiskMitigation?WhatAreSomeRiskMitigationExamples?MitigatingfinancialriskRiskmitigationinpersonalrelationshipsMitigatingtheriskofhealthproblemsWhatAreSomeRiskMitigationStrategies?HowDoICraftaRiskMitigationPlan?WhatAreSomeRiskMitigationBestPractices?ConnectrisksacrosssilosCentrallymanageinformationIdentifygapsinyourriskmanagementprogramUsingSoftwareAsARiskMitigationSolutionManageTomorrow’sRisksTodayUsingLogicManager’sEnterpriseRiskManagementSoftware WhatIsRiskMitigation? Riskmitigationisdefinedastheprocessofreducingriskexposureandminimizingthelikelihoodofanincident.Itentailscontinuallyaddressingyourtoprisksandconcernstoensureyourbusinessisfullyprotected.Mitigationoftentakestheformofcontrols,orprocessesandproceduresthatregulateandguideanorganization. Tobetterunderstandwhatriskmitigationmeans,let’slookatitinrelationtotheentireEnterpriseRiskManagement(ERM)process:Yourcontrolsarebornoutofyourrisks;youroverallgoalistopreventcertainrisksfrommaterializing.Thisleadsyoutodeveloppoliciesandprocedurestohelppreventthem.Theprocessofstrategicallycreatingcontrolsiswhat“riskmitigation”refersto. WhatAreSomeRiskMitigationExamples? Tobetterunderstandriskmitigation,let’sexaminesomereal-worldexamplesofcontrols—orprocessesandproceduresthatweuseinoureverydaylivestoreducecertainrisksfrommaterializing.Note:thefollowingexamplesareaimedtoprovidecontexttobetterunderstandhowmitigatingactivitieswork;everypersonhasdifferentcircumstancesandneeds,sothesearenottobetakenaspersonaladvice: Mitigatingfinancialrisk Weneedmoneytosurviveonadailybasis.Wealsoneedittobepreparedforthepossibilityofamajorlifeeventrequiringalargesumofmoneybeputforward,andforwhenoldagepreventsusfrombeingabletoearnmoneythroughajob.Inordertostayfinanciallysecure,wemaydecideto: Maxoutourretirementsavings Keepanemergencyfundinaliquidsavingsaccount Paycashforeverythingtoensurewe’renotbuyinganythingwecannotafford Riskmitigationinpersonalrelationships Positivepersonalrelationshipsbringfulfillmenttoourlives,andlikeeverythingelseweneedtoactivelymaintainthequalityofthoserelationshipstokeepthemfromfallingapart.Herearesomeexamplesofthosenurturingefforts: Treatingthosewelovewithkindnessandrespect Consistentlycalling,sendingcardsandvisiting Cuttingoutrelationshipswithpeoplewhodon’ttreatuswell(inordertomakemoretimeforthosethatdo) Mitigatingtheriskofhealthproblems Ourhealthisthefoundationofourlives,soit’scriticaltotakepropermeasuresofensuringit.Whilethereareinfinitewaystomaximizeourhealthandminimizetheriskofseriousproblems,herearejustafewofthemostcommonmitigationactivities: Drinkingplentyofwater(therecommendedamountforourbodysize) Stayingawayfromtoxicbehaviorslikesmoking,drinkingoreatingprocessedfoods Exercisingregularly Dependingonhowimportantcertainareasofyourlifearetoyouroverallidentityandwell-being,youmayformalizeyourmitigatingactivitiesornot.Forsome,savingmoney,nurturingrelationshipsandstayinghealthycomeswitheaseandrequiresnostructuredplantostayontrack.Forothers,makingabudgetsheet,fillingupacalendarwithsocialeventsorstickingtoarecommendeddietiscriticalforholdingeverythingtogether. WhatAreSomeRiskMitigationStrategies? Sowhatdoesriskmitigationlooklikewithinabusinessorganization?Onceyou’veidentifiedandassessedarisk,it’simportanttounderstandwhyitisariskanddeterminehowtorespondappropriately.Let’sconsidertheriskof“datasecurity.”Themostbasicmaterializationofthisriskisasecuritybreach.Assoonasasecuritybreachoccurs,howwouldyouimplementwaystomitigatetheimpact? Startbydevelopingsomeinitialbestriskmitigationstrategies.Forexample: Buildingfirewalls Enforcingapasswordprotectionpolicy Adjustingaccessrights Oncethesemitigationmeasureshavebeenputintoplacetosupportthosestrategies,ifadatabreachoccursyoucantrackitbacktothesourceorfailedactivity.Themitigatingactivitiesshouldalwayssupportyourbroaderstrategy.Whentakingapreventativeapproachtodatasecurity,someofyourstrategiesmightinclude: Ongoingmonitoring Matchingallsecuritylevelimplementationtosecurityrequirements Improvingemployeeadoptionofsecuritymeasures Onceyou’veidentifiedyourstrategiesformitigatingrisk,it’stimetodevelopaplanforputtingthosestrategiesintomotion.Askyourself,“whichactionsdoIneedtotaketocarryoutthesestrategies?” HowDoICraftaRiskMitigationPlan? Organizationsvaryinthematurityoftheirriskmitigationplan;somehaveneverformallydocumentedanything,whereasothershaveextensiveprocessesinplace. Herearetworeasonswhyformaldocumentationandstrategic,extensiveriskmanagementplanningiscritical: Formalizingyourriskmitigationprocesseshelpsuncoverwhatisactuallyhappeningacrossbusinessareasanditistheonlywaytogetanaccuratepictureofwherestrengthsandweaknesseslie. Ifariskweretomaterialize,youcanseewheresomethingisnotworkingeffectivelyand/ordetermineifthereareadditionalactionstotakethatcanimprovevalue. Documenting,managingandlinkingmitigationactivitiestotheriskwhichtheyarehelpingpreventhelpsyouseegapsandvulnerabilitiesinyourorganization.Italsoensuresthatifalosseventorriskmaterializes,theactivitiesthatweremeanttopreventitmustbeimproveduponorexpanded. Whenthinkingaboutdevelopingyourriskmitigationplan,keepinmindthatitshouldaddressthefollowingareasofconcern: ChangeManagement:Howdoyoumanagechangetotheactivityovertime? Compatibility:Istheactivityalignedwithotheractivities? CorporateObjectives:Areperformancegoalsadvancedbythisactivity? Cost:Doesthecostexceedthebenefitderivedfromit? Dependencies:Aretherelevantresourceelementslinkedtotheactivity? Effectiveness:Doesitaddressspecificrisks? Efficiency:Isiteasytoimplementandmonitor? Leverage:Canitprovidebenefitinotherareas? Ownership:Whoisresponsibleformaintainingthisactivity? Regulatory:Doesitaddresscompliancereadinessstandards? Organizationsoftenlosetrackofwhyaparticularmitigationactivitywasimplementedtobeginwith,andfailtorecognizewhetherthemitigationactivityisstillrelevantandproperlymaintainingthebalanceofriskexposuretocost.Thisiswhyit’simportanttothoughtfullyapproachyourriskmitigationstrategydevelopment. WhatAreSomeRiskMitigationBestPractices? Thereareendlesswaystoapproachthedevelopmentofariskmitigationstrategy.Itcanbeoverwhelmingtodeterminethebest,mosteffectivewaytomitigaterisk.LogicManagerhasbeenempoweringorganizationstoanticipatewhat’saheadthrougheffectiveriskmanagementsince2005. Throughourexperience,we’vebeenabletodeterminethefollowingbestpracticesforriskmitigation: Connectrisksacrosssilos It’sessentialtoconnectthedotsbetweencontrolsandtheireffectsoneachbusinessprocess.Youcanaccomplishthisbyconnectingriskmitigationactivitiestorespectivedepartments,resourcesandthepeopletheydependon.Thebestwaytoaccomplishthisisbyimplementingtaxonomytechnology.Thisallowsyoutovieweverythingthroughonecentralizedrepository.Onceyou’vedrawncross-departmentalconnections,you’llbeabletobuildworkflowsthatnotifytheappropriatestakeholdersifatanypointtheresources,policiesorprocessesconnectedtoagivencontrolchange. Centrallymanageinformation Youwanttobecertainthattherightpeoplearelookingatthemostrelevantinformationatanygiventime.Thiscanbeensuredbybuildingasearchablerepositoryofoperationalandproceduralactivities.You’llwantthisrepositorytohighlightcontrols,prioritylevels,historicalchangesandduedates.NotethatwithanERMsoftware,youeliminatetheburdenofupdating,notifyingandtrackingrisksthatarealreadymaintainedinanotherdepartment. Identifygapsinyourriskmanagementprogram Whileyoumayhavesuccessfullyaddressedtherisksinyourorganizationanddeterminedthedirectionofyourriskmitigationefforts,it’scrucialtocontinuallyaddresstheeffectivenessofthoseefforts.Theremaybemisalignmentsandineffectivecontrolsthatareweighingyoudown.Automatedreportingofkeyriskindicatorscaneliminateredundanciesandgapstoprotectyourorganization. UsingSoftwareAsARiskMitigationSolution Protectingyourorganizationistheultimategoal.Toensureyourprotectingittothefullestextent,yourtoprisksandconcernsneedtobecontinuallyaddressed.LogicManager’sRiskMitigationsoftwareenablesyoutomakeconnectionsthroughoutyourorganizationbylinkingcontrolstorisks,activities,policies,proceduresandmoretotrackeffectiveness.Ourriskmitigationsoftwaregoesbeyondrisk-specificmitigation,andhelpsyoueliminateduplication,streamlineoperations,andachieveheightenedbusinessperformance. Withoutinvestinginriskmitigation,you’reeliminatingareasthatyoucancontrol.Thisleavesyouentirelyvulnerabletotheimpactsofexternalforces.Whilewemaybeabletoachievesuccessinourpersonallivesbysimplyimplicitlymitigatingrisk,it’scriticaltogoaboveandbeyondinourbusinesses. Torealizethefullpotentialofyourbusiness,startbyinvestingyoureffortsintoriskmitigation. RequestafreedemonstrationofoursolutionstoseehowLogicManager’sconnectedsolutionsandexpertsupportcanenableyoursuccess. ManageTomorrow’sRisksTodayUsingLogicManager’sEnterpriseRiskManagementSoftware Bookafreedemotoseehowoursoftwarecanprotectandreducenegativeimpactsagainstyourbusiness. SCHEDULEDEMO LogicManagerAnalystTeam2021-11-22T23:25:57-05:00 FREEDownload:5StepsForBetterRiskAssessments RecentPosts WhatIsReputationalRiskForBanks? HowOftenShouldABCPBeReviewed? WhyIsSustainabilitySoImportantToACorporation SPEAKTOARISKEXPERT RelatedPosts WhatIsReputationalRiskForBanks? February10th,2022 | 0Comments HowOftenShouldABCPBeReviewed? February7th,2022 | 0Comments WhyIsSustainabilitySoImportantToACorporation February7th,2022 | 0Comments WhatIsanIntegratedRiskManagementApproachforanOrganization? January4th,2022 | 0Comments Closeproductquickview× Title Pageloadlink 0 MyFavoritesList YourFavoritesListcanbesavedorsenttoourteamofexpertsatanytime!Herearethesolutionsyou'veaddedtoyourlistsofar: YourlistisemptyReturntoSolutions KeepBrowsing