What to do with Risk?
You may not have to take action to reduce every risk facing your business or project but there are other risk strategies you can adopt:
The obvious and instinctive action might be to reduce the risk you are exposed to. This could be done by introducing external influences such as to increase staff training, add new machinery/software or review the process involved.
Although less likely where a risk is to people, in cases where the risk is purely financial loss it might be appropriate to accept the risk of a loss. The justification for this could be that to reduce the risk is too costly/less profitable, or that the business could sustain the loss.
Do you need to take this risk? Sometimes it’s more appropriate to abandon a project rather than confront the risks that materialise.
As the name suggests, this strategy assumes that the threat has been realised, and provides a fall back options. For example, if X does happen then we will do Y.
It’s important to consider any safety and cost implications of this strategy in advance.
Transferring risk is not uncommon and to some extent we all do this every day with the various insurance policies we may have.
Aside from insurance, there may be other parties willing to accept your risk, particularly in commercial agreements.
Similar to transfer but in this case 2 or more parties accept a proportionate exposure to the risk. This may be particularly relevant in commercial agreements where both user and supplier are set to benefit from the end result.
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