Risk Treatment/Risk Response Options
The treatment of risk is one of the most important aspects of risk management. Risk treatment is also sometimes referred to as risk response
The following are the four options for responding to risk.
Risk Mitigation
- In this approach, efforts are made to reduce the probability of risk or impact resulting from the risk event by designing appropriate controls.
- The objective of risk mitigation is to reduce the risk to an acceptable level.
Risk Sharing/Transferring
- In this approach, risk is shared with partners or transferred via insurance coverage, contractual agreement, or other means.
For example, natural disasters have a very low probability of occurring but have a high impact if they do. The response to such a risk should be risk transfer.
Risk Avoidance
- In this approach, projects or activities that cause risk are avoided.
- Risk avoidance is the last choice when no other response is adequate...
