Risk

• Risk management strategy


  A dedicated plan which details how organizations are going to deal with risk, both pre-emptively and as incidents occur
• Types of risk management strategy

  • Risk acceptance
  • Risk transference
  • Risk avoidance
  • Risk reduction
• Risk acceptance


  A risk is accepted with no action taken to mitigate
• Risk acceptance approach will not reduce the impact of a risk or even prevent it from happening, but that's not necessarily a bad thing
• Sometimes the cost of mitigating risks can exceed the cost of the risk itself, in which case it makes more sense to simply accept the risk
• Risk transference


  Risk transference is defined as: 'A risk transferred via a contract to an external party who will assume the risk on an organization's behalf
• Choosing to transfer a risk does not entirely eradicate it. The risk still exists, only the responsibility for it shifts from your organization to another
• Abbie Glosop: '"Transferring risk is not about escaping challenges, but strategically delegating uncertainties to those best equipped to handle them"'
• Risk avoidance


  A risk is eliminated by not taking any action that would mean the risk could occur
• If you choose this approach, you are aiming to completely eliminate the possibility of the risk occurring
• Treating risks by avoiding them should be reserved for risks that would have a major impact on your organization if they were to occur
• Abbie Glosop: '"Sometimes the greatest risk is not taking one at all. However, wisdom lies in knowing when to navigate the storm and when to seek calmer waters."'
• Risk reduction


  Risk reduction is when a risk becomes less severe through actions taken to prevent or minimize its impact
• Abbie Glosop: '"Risk reduction is the compass that guides us through the uncertainties of life, ensuring a safer passage to success."'
• You will need to fully understand each risk your organization faces so that you can choose the appropriate strategy to treat them – whether that's through acceptance, transference, avoidance or reduction