Risk Mitigation
21
May

What is Risk Mitigation and What Are Its Different Types?

Reading Time: 6 minutes

Lockdown moved businesses and individuals to the internet. Even during the COVID-19 hit, products and services were made accessible to the public with the internet. All over the world internet is transforming how we interact with the world by moving everything online. This switch also generates a ton of unprotected data and the potential risk of hackers trying to steal the organizations and individual’s sensitive information. There is seldom an ideal solution for anything but placing significant effort into preventing the bad outcome usually produces a good outcome and positive result. This is where risk mitigation comes in. With a large amount of unprotected data, the companies face many risks and threats like reputation risk, business disruption, security risk, etc. An organization’s success and functionality depend on how well it handles risks and the impact. This article talks about the risk mitigation strategies and best practices to avoid chances of risk.

What Is Risk Mitigation?

Risk management steps include risk assessment, risk analysis, and risk mitigation. Risk mitigation is a part of risk management, and its implementation differs from organization to organization. Organizations face various risks, some of which can result in significant loss of profits or even financial ruin. A company’s most crucial risk types are the following: strategic risk, compliance risk, business risk, financial risk, and reputational risk.

A risk mitigation strategy aims to eliminate a particular risk rather than reduce its effect on the organization. Risk mitigation is a method of planning and mitigating the risk of cyberattacks and breaches that an organization is likely to face. Risk mitigation follows a few steps to address threats such as cyber-attacks, physical or virtual damage that might put the organization at risk. For instance, a type of risk mitigation strategy is risk limitation, which reduces the likelihood that a risk will occur or decreases the severity of the risk.

Types of Risk Mitigation Strategies:

  1. Acceptance

This strategy identifies the risk and does not take any measures to mitigate it as the effect of such risks are negligible and not harmful. Therefore, the risk can be accepted, and the impact caused by such risks is within a tolerable level.  There may be some scenarios where the risk might not fall under the tolerance level, however, the organization would still choose to accept the risk as other alternatives are undesirable.

  1. Avoidance

It is the exact opposite of acceptance. Risk avoidance means that the organization does not perform that task which poses a risk. It involves taking necessary precautions and drawing up measures to avoid the risk at all costs. The effects are used where the cost to resolve the problem is too high. An organization, for example, can choose certain practices to avoid any threat. It is a simple risk avoidance strategy.

  1. Transfer

Risk transfer is yet another risk-mitigation strategy. Risks that might have low chances of occurring but will have a sizeable financial effect should be shared and transferred to any other party. This strategy is used applied when accepting risk or avoiding risk is not an option. This strategy entails assigning responsibility for the risk and its consequences to a third party.

  1. Reduction

The most prevalent risk mitigation strategy is risk reduction or risk limitation strategy. It is a combination of risk acceptance and risk avoidance. One of the common methods is risk reduction since there is a possibility to minimize the risk. Security measures are needed to reduce the impact of cyberattacks, disruption, and breaches.

  1. Monitor

The changes in the risk that occur after their identification may occur in the lifecycle of projects. If they are not appropriately monitored, they can have an effect on the entire system. It also helps in understanding whether the current strategies are relevant and effective.

What Is a Risk Mitigation Plan?

A risk mitigation plan outlines the steps you should take to avoid the risks associated with the organization. It identifies and evaluates the risk early on to prevent unpredicted damage to the project. As a result, a risk mitigation plan is required to reduce risk exposure. Developing a risk mitigation plan aids in the reduction of threats that could jeopardize your business or personal objectives. Having a clear plan means that you can prevent minor issues from becoming major ones.

There are a few steps that most organizations take when developing a risk mitigation plan.

1. Determine all possible events in which risk exists.

A risk mitigation approach considers the organization’s goals, project data security, and threats due to the geographic location. Employees and their needs must also be considered in a risk mitigation strategy.

2. Conduct a risk assessment

It includes determining the level of risk associated with the incidents you’ve recorded. Steps, procedures, and controls are used in risk assessments to minimize the levels of risk.

3. Recognize the risks

The detection of risks takes place both at the start and during the project. At the same time, several risks are considered identified risks, while remaining need more research to determine. Build a risk assessment checklist that applies to your project type to identify risks. It can be accomplished by conducting interviews with all shareholders and technical experts.

4. Tracking the risks

It implies keeping track of risks that their severity or their relevance to the organization’s operations. Effective measures are essential for monitoring risk as it progresses and the plan’s ability to comply with regulatory requirements.

5. Monitoring improvement

It includes reviewing the plan’s efficiency in evaluating risk and making necessary improvements. Checking a strategy is vital in enterprise risk management. If a plan is in motion, it should be tested and analyzed regularly to ensure that it is up to date and working correctly. Since data centers’ risks are constantly changing, the risk mitigation plans should be updated to reflect any risk or shifting priorities.

Risk Mitigation Best Practices

In the development of a risk mitigation strategy, there are numerous ways. Determining the best and most efficient way of mitigating risk can be a great way. The following are the best practices for the mitigation of risks were identified:

a. Communication:

One of the vital aspects of risk mitigation is the communication of risks throughout your organization. All departments are identified and monitored for critical risks or risks that would have a high organizational impact. New risks are addressed, evaluated, and mitigated. Educate the entire organization about risks by communicating with them.

b. Risk Management Policy Guidelines

1) Are everyone’s roles and duties being clear?

2)Are the policies and procedures in place that define how to mitigate risks that have been identified?

3) Are all workers aware of these policies?

These policies will assist you in identifying all potential risks that can affect your company, their probability and effect, how you intend to minimize and avoid those risks, and how you will track for and handle those risks.

c. Involve Stakeholders

To manage the risk efficiently, the organization should involve all stakeholders, starting with the initial risk evaluation. Stakeholders may include people like managers, customers, employees, shareholders, syndicates, etc. Many of these people are likely to be essential players in the risk management processes. Each person in the organization represents different roles and tasks. It provides you with a broad overview of all aspects of the organization and the risks that come with them.

The terrifying risks to any project or organization are those that are unknown. So, Risk mitigation is crucial. Organizations must introduce risk mitigation strategies at any point of the project and effectively work on them if their staff have the necessary skills and training to incorporate different risk management and mitigation activities in their projects. A risk mitigation strategy provides you with the ability to eliminate or minimize the potential risk. In comparison, it may appear simple to organize your risk strategy, action – and not just reporting or listing action plans. The ultimate objective is to keep the organization secure. The organization must discuss its top risk and issues regularly to ensure that you are fully protecting them.

If you want to start your journey to identify and monitor potential risks by understanding strategies to avoid risks in a project or organization and are interested to learn more about risk management career prospects and roles, take a look at EC-Council’s Certified Chief Information Security Officer course. It provides you with in-depth knowledge on risk management and mitigation methods, security program management and operations, Information Security Controls by the most experienced CISOs worldwide.

Begin your career as a Certified Chief Information Security Officer Today!

References:

  1. https://www.process.st/risk-mitigation/

  2. https://www.indeed.com/career-advice/career-development/risk-mitigation-strategies

FAQs

What is Risk Management?
Risk management is the robust method of identifying risk, quantifying that risk, and then employing different strategies to manage that risk. It also Identifies and manages organizations profit risks

Read More: Essentials of Risk Management: Certification and Training

How to plan an effective Risk Management Framework?
Drawing up an effective risk management framework is very important to mitigate cyber threats and security breaches. Here are few steps to follow to ensure the cybersecurity risk management practice is efficient.

  1. Understanding the organization’s security landscape
  2. Identifying the gaps
  3. Creating a team
  4. Assigning responsibilities

Read More: 9 Steps for Effective Cybersecurity Risk Management

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