Risk mitigation strategies are crucial to implement in any business. Planning for disasters and having systems in place to prevent and deal with different situations is essential in the workplace. These strategies will protect your business or staff if faced with an unfortunate occurrence.

You will typically see four standard methods: Reduction, Avoidance, Transfer, and Retention. You can implement just one or all four strategies when developing your strategy. Whichever you use, keep in mind that you should continually revisit your plan to assess how well it is working and determine what changes, if any, should be considered.

Let’s go over the four most common risk mitigation strategies you will see being used within a business.

1.) Risk reduction

Risk reduction is a strategy used to lower risks. This method will take precautions to prevent or limit the impact and chances of possible dangers within the workplace. Here, you can implement ways to reduce risks by doing things such as conducting regular quality control processes, employee safety training, or by staying in compliance with the legislative laws. Another example of how risk reduction is helpful to your business is by installing proper security systems, which will minimize the chances of theft.

2.) Risk avoidance

You can’t avoid risks entirely but can reduce your chances by following the risk avoidance strategy.
This method allows you to avoid risky situations whenever possible. Typically, somebody will use this method when faced with the risk of some significant impact on their business. One example of risk avoidance would be weighing the pros and cons of a future business proposition and then deciding to back out to avoid any negative backlash that may come from continuing any further. Doing business with an investor who could tarnish your company’s reputation isn’t advisable. When using the risk avoidance strategy, you outweigh the positives and negatives and consider how it could ultimately affect your business.

3.) Risk transfer

Risk transfer is allowing another party to accept responsibility within a business endeavor. Usually, you will find this when people are involved in a financial agreement with another party. A common situation you will see this is when purchasing insurance. The insurance company agrees to be financially responsible and cover costs if something happens. Another common problem you will find risk transfer strategies to be valid is when dealing with contracts. This agreement between two or more parties will impose who is accountable for what, lowering your liability within your business.

4.) Risk Acceptance

The fourth risk mitigation strategy commonly used is risk acceptance. This generally means that if a situation were to arise, and would accept responsibility and make things right, even if that involves taking a loss. When doing so, you understand the impact this loss will have on your business but that accepting it will far outweigh any possible litigation down the road. Dealing with customer issues and complaints and fixing them by doing such things as allowing refunds or exchanges are typical examples of risk acceptance.

So now that you’ve become aware of the four major risk mitigation strategies, you should be able to see the benefit of implementing them into your business.