Risk mitigation is a strategy that organizations use to prepare for and lessen the effects of threats faced by a business. It is a process that involves identifying, evaluating, and prioritizing risks, followed by coordinated and economical application of resources to minimize, monitor, and control the probability or impact of unfortunate events or to maximize the realization of opportunities. Risk mitigation is one element of risk management, which also includes identifying and analyzing risk.
The goal of risk mitigation is to prepare a business for all potential risks, but a proper risk mitigation plan will weigh the impact of each risk and prioritize planning around that impact. Risk mitigation focuses on the inevitability of some disasters and is used for those situations where a threat cannot be avoided entirely. Rather than planning to avoid a risk, risk mitigation takes steps to reduce the negative effects of threats and disasters on business continuity.
Some risks can’t be avoided, so companies need to have a risk mitigation plan to confront various threats, repair the damage, and restore operations. A company can implement several risk mitigation strategies to deal with different kinds of risk, including risk avoidance and risk reduction. The main types of risks a company faces are strategic risk, compliance risk, operational risk, financial risk, and reputational risk.
