Risk Mitigation Basics

Risk Mitigation Basics

Businesses face various daily risks, and minimizing or mitigating these risks can mean the company’s continued success. When you want to reduce risks for your business, knowing some basics of the process and where to find help is a good idea.

What Is It?

Risk management or mitigation is identifying, prioritizing and evaluating risks a company or individual faces. This can include physical hazards such as slip-and-fall accidents and investment or legal troubles for most companies. Firms like FTI Consulting will help you manage your risks by taking on risk mitigation for you and bringing fresh eyes to look everything over.

Why Do It?

An insurance policy is one of the most common ways to mitigate risks. Mitigating your risks will allow you more control over where you prioritize your efforts and leave fewer things to chance. Advice from professionals at FTI Consulting can help you reduce risks by changing policies and procedures, investing in building management, and conducting market research.

What Risk Types Are There?

Compliance, legal, reputational, strategic and operational risks are those faced by most companies. You can determine these risks and take steps to manage them by listing all of the risks you can think of, or your consultants can and then rank them by priority.

What Mitigation Types Are There?

Acceptance, avoidance, transference and reduction are the four primary ways to deal with the risks your company faces. Each type will have pros and cons, so knowing a summary of each class is helpful to the process. Acceptance is just that, accepting the risk for what it is. This is commonly seen in investments where potential rewards outweigh the dangers. Avoidance is taking measures to keep the worst-case scenario from happening; for example, you can avoid the risk of car accidents by reducing distractions while behind the wheel. Transference of risk is passing all or part of the risk onto a third party, such as purchasing an insurance policy, while reduction is using safety signs and employee training to minimize the chances of insurance claims.

Some basics of risk mitigation can include hiring consultants to help pinpoint your risks and navigate the management process. You can also take on this challenge yourself with time and research.

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