Five Things to Know about Risk Mitigation | riskmethods

A slightly more complete risk mitigation definition is “developing preventative and reactive action plans for reducing the likelihood of risk, or damage from ... FiveThingstoKnowaboutRiskMitigationTHERESILIENTENTERPRISEITHERISKMETHODSBLOGTableofContents1.WhatIsRiskMitigation?2.WhyRiskMitigationIsImportant3.WhatAreRiskMitigationStrategies?4.What'sinaRiskMitigationPlan?5.HowtoMitigateRiskwithTheriskmethodsSolution1.WhatIsRiskMitigation?Atitssimplest,riskmitigationlowersexposuretorisk,ormoderatestheadverseeffects.Aslightlymorecompleteriskmitigationdefinitionis“developingpreventativeandreactiveactionplansforreducingthelikelihoodofrisk,ordamagefromrisk.”Withintheprocurementandsupplychainenvironment,theriskmitigationprocessincludesusingappropriatemeasurestosecuresupply.Riskmitigationcanalsobethoughtofasriskcontrol.Forexample,regularmaintenanceofamachinecanhelpyoucontroltheriskofbreakdowns.Thispreventativeefforttomitigateorcontrolriskcostsmoneyorresources.However,thecostofreactingtoriskcanendupbeingmuchhigher.InourriskmethodsRiskReport2021,weprovideinsightsforprocurementandsupplychainprofessionalsonhowtoprepareforfutureshiftsinriskandthusmitigatetheeffects.2.WhyRiskMitigationIsImportantIgnoringriskfactorsisnotaneffectivestrategy,nordoesitmakeriskgoaway.Itisalsoinefficienttoestimatetheimpactofriskwithouttakingfurtheraction.Thisiswhyriskmitigationisimportant.Byhavingadefinedplanwithrationalandstructuredactions,youcanavoidcertainriskeventsaltogether,orreducetheseverityoftheiraftermath.Riskmitigationisjustonepartofagoodsupplychainriskmanagementstrategy,inwhichyoumonitor,identify,assess,andmitigaterisk:MonitorHereyouobserveriskoccurrencesinyoursupplynetwork,transporthubs,andyourownfacilities.Notonlydoesthishelpyoureactfastershouldriskeventsstrike,butithelpsyourecognizepatterns.Thisallowsyoutodevelopproactivemitigationstrategies,soyouactinadvanceofevents.IdentifyYouuncoverpotentialrisksinyoursupplychains.Amongothers,theseincludefinancial,cyber,compliance,man-made,naturalhazard,andgeopoliticalrisk.Identifyingsupplychainriskideallyincludesanyriskthatarises fromsub-tiersuppliers,thirdparties,oranypointsalongthesupplypath.AssessInyourriskassessment,youevaluatehowlikelyitisthattheeventwillstrike.Youalsoestimatetheriskimpact,inotherwords,howitwillaffectsupplyorhowmuchdamageitcouldcausetoyouroperations.Here,ariskassessmentframeworkcanhelpyououtlinewhichrisksarehighandwhicharelow.MitigateForsupplychains,riskmitigationmeasuresoftendependontheprobabilityandimpactoftheriskeventwithinyoursupplynetwork.Youdevelopplansbasedonhowseveretheconsequenceswouldbetotheprocurement,production,anddeliveryofgoods.Aneffectivesupplychainriskmanagementcycleaddressesalltypesofrisk,acrossalltiersandsupplypaths.3.WhatAreRiskMitigationStrategies?Byunderstandingthelikelihoodandimpactofthreatsinadvance,riskmitigationhelpsyouunderstandthetotalriskyouarewillingtoassume.Whenmitigatingrisk,varioustechniquesarecommonlyusedinparallel.1.PrioritizeriskEvaluatetheareasthatyourbusinessrelieson.Thesearethefirstrisksyouhavetocontrol.Riskprioritizationofcertaincategoriesorprocesses,however,isjustthefirststep.Onlyaholisticapproachwillallowyoutotrulymitigateriskinyourorganization.2.AcceptriskMostpeoplearefamiliarwithMurphy’slaw:Whensomethingcangowrong,itwill,andattheworstpossibletime.Riskmitigationinvolvesacertaindegreeofriskacceptance,inwhichyoualsoaccepttheprobabilityofathreat,alongwithitsconsequences.3.AvoidriskRiskmitigationcanincluderiskavoidance.Thisiswhenorganizationssteerclearofcertaintypesofriskthroughproactivemeasures.Insupplychainplanning,thismightbekeepingbufferstocktoavoidoutages,forexample.4.ReduceriskSimilarly,riskreductionservestolowerorminimizespecificrisksandtheirimpact.Insolvencyofakeysupplierwouldmostlikelyseverelydisruptoperations,soyouwanttominimizesupplierfinancialrisk.Supplierevaluationandongoingreal-timemonitoringhelpreducethatthreat.5.TransferriskThisiswhenanotherpartyagreestoaccepttheconsequencesofrisk.Acommonexampleoftransferredriskisinsurance.Youpayacertainamount,theyreplacethecostsofspecifiedriskevents.Here,too,mitigationinvolvesthebalanceofcostandrisk.Themoreyoucover,thehigheryourpremium.4.What'sinaRiskMitigationPlan?Hereisanexampleofaday-to-dayriskmitigationplan.Let’ssayyouwanttoleavethehouse.Youbeginbymonitoringtheweather.Youlookoutsideandseethatitiscloudy,soyouaccepttheriskofrain.Youcan’tinfluencetheweather,butatleastyouhaveidentifiedtherisk.Youasseshowhighthisriskisbycheckingtheweatherreport,andseethatthereisa70%chanceofrain.Soyoudecidetotakeanumbrellawithyou.Inthisway,yourumbrellamitigatestheconsequences–gettingwet–onceyouhavemonitored,identifiedandassessedtherisk.So,inariskmitigationplan,yououtlinetherisks,anticipatetheconsequences,andplanoptionstomoderatetheeffects.Inmuchthesameway,youcansupportyoursupplychainriskmitigationeffortswithariskscorecardforeachriskobjectinyoursupplynetwork.Thisallowsyouto:CollectyourkeyevaluationcriteriainoneplaceRatebusinesspartners,facilitylocations,ortransportationhubsbasedonindicatorswithindifferentcategoriesofrisk,suchasnaturalhazardsorcomplianceriskAssignweightstothecategoriesSeeataglancewherethegreatestthreatsexistCoupleyourriskscorecardswithyoursupplychainknowledge.Thenyouarewellonyourwaytoariskmitigationsolutionaspartofholisticsupplychainriskmanagement.Andonemorething.Whenmitigatingrisk,itisagoodideaseekoutexpertadvice.Expertscantellyouwhat'sworkedinthepast,what'seasy,andwhat'shard.Riskassessmentprofessionalshavetheknowledgeandexperienceessentialtotheirareaofexpertise.Inotherwords,thatweatherreportwasputtogetherbymeteorologistsusingcomplexequipmentincludingweatherradar,air-,land,andseastations.Thedatacanpinpointconditionsatanyoftheselocations,andisaggregatedbypowerfulcomputerprograms.5.HowtoMitigateRiskwithTheriskmethodsSolution™Whenitcomestosupplychainriskmanagement,weknowjustwhereyoucanfindtheexperts,andthetechnology,tohelpyoupinpointvarioustypesofrisk,suchasfinancial,cyber,compliance,andextremeweatherevents,atlocationsthatarecriticaltoyou.Supplychainriskmanagementismuchmorethanmitigatingriskinyoursupplynetwork.ThebestriskmitigationisembeddedwithinthecomprehensivesupplychainriskmanagementprovidedbyThe riskmethodsSolutionTM.Byusingartificialintelligence,The riskmethodsSolution helpsorganizationsmonitor,identify,assess,andmitigaterisk.Benefitsincludecompetitiveadvantagefromcostavoidance,businesscontinuity,compliance,andstakeholdertrust,whetheremployees,businesspartnersorinvestors.Goodriskmanagementreliesondeliveringtherightinformationtotherightpeopleattherighttime.Enterprisesestablisharisk-managementculture,fromtheexecutivelevelthroughprocurementandsupplychainroles,andcommunicatetheseaims.Therisk-awareorganizationfactorsinthecostofriskineverydecision.You’llbepreparedforrisk,comerainorshine. Wanttolearnmoreaboutmitigatingrisk?DOWNLOADOURRISKMETHODSRISKREPORT2021FORPROCUREMENTANDSUPPLYCHAINLESSONSFROMTHEYEARTHATCHANGEDEVERYTHINGFirstname *Lastname *Email *Company *WebsitecommentChooseyourCountry *UnitedStatesUnitedKingdomGermanyAustriaSwitzerlandDenmarkFinlandFranceNetherlandsNorwaySwedenAndorraUnitedArabEmiratesAfghanistanAntiguaandBarbudaAnguillaAlbaniaArmeniaAngolaAntarcticaArgentinaAustraliaArubaAlandIslandsAzerbaijanBosniaandHerzegovinaBarbadosBangladeshBelgiumBurkinaFasoBulgariaBahrainBurundiBeninSaintBarthélemyBermudaBruneiDarussalamBolivia,PlurinationalStateofBonaire,SintEustatiusandSabaBrazilBahamasBhutanBouvetIslandBotswanaBelarusBelizeCanadaCocos(Keeling)IslandsCongo,theDemocraticRepublicoftheCentralAfricanRepublicCongoCoted’IvoireCookIslandsChileCameroonChinaColombiaCostaRicaCubaCapeVerdeCuraçaoChristmasIslandCyprusCzechRepublicDjiboutiDominicaDominicanRepublicAlgeriaEcuadorEstoniaEgyptWesternSaharaEritreaSpainEthiopiaFijiFalklandIslands(Malvinas)FaroeIslandsGabonGrenadaGeorgiaFrenchGuianaGuernseyGhanaGibraltarGreenlandGambiaGuineaGuadeloupeEquatorialGuineaGreeceSouthGeorgiaandtheSouthSandwichIslandsGuatemalaGuinea-BissauGuyanaHeardIslandandMcDonaldIslandsHondurasCroatiaHaitiHungaryIndonesiaIrelandIsraelIsleofManIndiaBritishIndianOceanTerritoryIraqIran,IslamicRepublicofIcelandItalyJerseyJamaicaJordanJapanKenyaKyrgyzstanCambodiaKiribatiComorosSaintKittsandNevisKorea,DemocraticPeople’sRepublicofKorea,RepublicofKuwaitCaymanIslandsKazakhstanLaoPeople’sDemocraticRepublicLebanonSaintLuciaLiechtensteinSriLankaLiberiaLesothoLithuaniaLuxembourgLatviaLibyanArabJamahiriyaMoroccoMonacoMoldova,RepublicofMontenegroSaintMartin(Frenchpart)MadagascarMacedonia,theformerYugoslavRepublicofMaliMyanmarMongoliaMacaoMartiniqueMauritaniaMontserratMaltaMauritiusMaldivesMalawiMexicoMalaysiaMozambiqueNamibiaNewCaledoniaNigerNorfolkIslandNigeriaNicaraguaNepalNauruNiueNewZealandOmanPanamaPeruFrenchPolynesiaPapuaNewGuineaPhilippinesPakistanPolandSaintPierreandMiquelonPitcairnPalestinePortugalParaguayQatarReunionRomaniaSerbiaRussianFederationRwandaSaudiArabiaSolomonIslandsSeychellesSudanSingaporeSaintHelena,AscensionandTristandaCunhaSloveniaSvalbardandJanMayenSlovakiaSierraLeoneSanMarinoSenegalSomaliaSurinameSouthSudanSaoTomeandPrincipeElSalvadorSintMaarten(Dutchpart)SyrianArabRepublicSwazilandTurksandCaicosIslandsChadFrenchSouthernTerritoriesTogoThailandTajikistanTokelauTimor-LesteTurkmenistanTunisiaTongaTurkeyTrinidadandTobagoTuvaluTaiwanTanzania,UnitedRepublicofUkraineUgandaUruguayUzbekistanHolySee(VaticanCityState)SaintVincentandtheGrenadinesVenezuela,BolivarianRepublicofVirginIslands,BritishVietnamVanuatuWallisandFutunaSamoaYemenMayotteSouthAfricaZambiaZimbabweIwanttoreceivepromotionalemails,includingproductupdates,specialoffersandbestpracticesBacktotop