Risk Treatment Strategies
Did you know that not all risk is negative? In fact, it is necessary to take some risk in order to meet your objectives and achieve positive results.
Risk Treatment is the process of selecting and implementing measures to respond to and mange risk. There are 5 main risk treatment strategies: avoidance, reduction, transfer, acceptance, and sharing.
Your treatment strategy will be dependent on whether the risk has a possible negative or positive outcome.
Here are some risk treatment options to consider:
For risks anticipated to have a positive outcome here are some risk treatment options:
- Continuing the activity likely to generate the positive outcome;
- Taking measures to reduce the likelihood that the risk will occur, to increase potential positive outcomes;
- Taking measures to reduce the potential impact should the risk occur, again to increase potential positive outcomes
For risks anticipated to have a negative outcome your options may include:
- Avoiding the risk by stopping, postponing, or canceling the activity that is causing the risk to arise;
- Taking measures to reduce the likelihood that the risk will occur, to reduce potential negative outcomes;
- Taking measures to reduce the potential impact should the risk occur, to reduce potential negative outcomes
- Transferring the risk to another party. Purchasing insurance is a great example of transferring risk. To transfer risk, you could also consider outsourcing the activity that is giving rise to the risk. The adoption of cloud computing is an example of an outsourcing activity that involves transferring of risk to another party. However, it is important to note that this strategy can create what is known as a secondary risk, because there is now a risk, with this example, that your cloud computing supplier might not have appropriate controls in place to protect your information assets.
Want to take your risk management one step further? Don’t forget it is also important to understand the concept of residual risk – which is the risk that remain after measures to manage risks have been put in place.
We understand risk management can be overwhelming, but you don’t have to do it alone. If you need a hand or want more information on managing your risks, just let us know.