Risk Mitigation Techniques

Risk is defined as the probability of unwanted consequences of an event and decision. The purpose of risk management is to "reduce or neutralize potential risks, and simultaneously offer opportunities for positive improvement in performance. A general risk management framework is composed of 3 main action phases: identification, analysis, and control. One way to manage risk is to categorize them using properties such as impact, probability and time frame. Four risk-handling strategies are suggested: mitigation, avoidance, transfer, and acceptance.

• Mitigation is to reduce the probability of a risk and/or the impact that an occurrence of the risk may bear. Risk limitation aims at the implementation of controls that dampen the effects of risk occurrences, while not completely alleviating them.
• Avoidiance is to eliminate the probability of a specific risk before its occurrence. This strategy is normally realized by trading the risk for other risks that are less threatening or easier to deal with.
• Transfer is to shift risk or the consequences caused by the risk from one party to another. Also called "risk sharing". Risk transfer may involve the purchase of an insurance policy, or the outsourcing of risky project parts.
• Acceptance is to adapt to the risk when it becomes a problem. The enactment of a risk contingency plan is required in this strategy.