10 Risk Mitigation Strategies & Examples for 2024

In every organization, regardless of industry or size, some amount of risk is guaranteed. But how you manage that risk can make a huge difference in the results and limit, or even eliminate, any disruptions. When your risk management process can’t prevent a risk from playing out, risk mitigation strategies can help.

What Are the Four Types of Risk Response?

If you walked into your office break room and found a toaster on fire, your next moves would be obvious. You’d grab a fire extinguisher, put out the fire, tend to any injuries, and report the incident for cleanup. While this is a simple scenario, it’s an ideal example of risk response. You identified a risk (a fire) and issued an immediate response (extinguishing it).

Most risks your company will face aren’t so simple. That’s where strong organizational risk intelligence comes in. By developing the ability to understand, evaluate, assess, and respond to identified risks, you can prepare your team for nearly any threat.

No single step is more important than the others. But risk response is the make-or-break moment when you put training into action and—hopefully—prevent a hazard from injuring your team members or disrupting operations.

There are four types of risk response:

• Risk avoidance: Sometimes, the best risk response strategy is to eliminate the threat altogether. For example, if employees are traveling into the path of an oncoming hurricane, canceling their trip would avoid that risk.
• Risk transference: You can share or transfer certain types of risk such that you wouldn’t bear the impact alone. An insurance policy is a form of risk transference, as you pay a small fee to a third party to avoid the full financial brunt of things like property damage.
• Risk acceptance: When a risk is small enough, it might make sense to let it play out. For example, if you’re planning an outdoor event with a 15% chance of rain, an acceptance strategy for that very small risk might make more sense than rescheduling. For threats that bring a higher potential impact, you need to determine your acceptable level of risk.
• Risk mitigation: Many types of risk are neither avoidable nor acceptable. But you can mitigate safety and business risks by reducing their likelihood of occurring and/or the impact they could have. For example, an industrial bakery can’t avoid having massive heat sources active, but it can take steps to reduce the danger to employees and property.

Planning and Risk Identification

In an ideal world, you could prepare your organization with a business strategy for any threat it may face. In reality, you have limited time and resources to dedicate to your risk management plan. By assessing risks, you can prioritize your mitigation efforts more effectively and streamline your risk management initiatives.

The key to risk mitigation planning is to identify what risks your business faces and focus on how likely a threat will come to fruition and how much it would impact your business. Perform a risk assessment to determine any potential risks and use a risk matrix to help with visualization and prioritization.

Using this matrix, you would begin with the highest risk level and then work your way down the list to address risks as time and resources allow.

For example, consider an Alaskan king crab boat that regularly works in rough seas and the following possible risks:

• A crewmember going overboard: Given the crew’s working conditions, there’s a high likelihood of this happening. The impact of the risk is high as well, as an incident could potentially lead to death. This is a critical risk, and it would be a top priority to focus on mitigating.
• GPS equipment breaking: As long as the crew maintains its electronics, the likelihood of this happening is low. But an equipment failure would have a moderate impact: The crew would need to navigate using methods with higher margins of error, possibly delaying travel. This would be a medium-level risk, and it would be wise to mitigate it.
• Eggs breaking in the kitchen: In rough conditions, waves can be unpredictable, and eggs could easily end up cracked, so there’s a moderate likelihood of this happening. However, the impact is low, as the crew would almost certainly have other food to eat. And cleanup to avoid slips would be a simple response. This scenario is a low risk, and you can ignore it in favor of more pressing concerns.

10 Types of Risk Mitigation Strategies & Examples

The risk mitigation process isn’t a one-size-fits-all endeavor. Once you understand how to manage your risks, you’ll find that different situations call for different approaches.

Here are 10 effective risk mitigation strategies you can implement to help you make informed decisions and handle various challenges.

1. Challenge the risk

Strategy: You can see some risks ahead of time and monitor them as they evolve. Challenge these risks by allowing them to progress as long as the danger is manageable and negligible. Then cut or slow them before the hazard becomes substantial.

Example: Weather forecasts aren’t perfect, but snowstorms are reasonably predictable. You can challenge the risk by staying open in the days leading up to an impending storm, then closing operations with enough time for your employees to make it home safely.

2. Prioritize your risks

Strategy: A single hazard can pose multiple risks to your business and team. When this happens, you can minimize the impact by prioritizing the risks and dealing with them in order of importance according to your risk matrix.

Example: If you’re responsible for the business continuity plan at a hospital in New Orleans, a hurricane is the sort of threat that keeps you up at night. Prioritizing your risks will speed up decision-making in an emergency. First, you’d ensure patients are cared for and employees are safe. Then, you’d use the remaining time and resources to minimize damage to your facilities and equipment, starting with expensive or hard-to-replace machinery and leaving things like office furniture for last.

3. Exercise the risk

Strategy: Since risks are hazards you’ve already identified, you can exercise them. Run experiments, drills, or tabletop exercises to model threats your team could face and evaluate the effectiveness of your action plans.

Example: Fire drills aren’t just for school children—for businesses, they’re a valuable tool for managing risk. By measuring the time it takes people to fully evacuate and assessing any challenges they face, you can minimize the risks they’ll encounter in the event of an actual fire.

4. Isolate the risk

Strategy: Businesses engage in a variety of inherently dangerous but necessary activities. You might not be able to alter the risk itself, but by isolating it from other aspects of operations, you can minimize the impact if something goes wrong.

Example: Risk isolation is one of the foundational strategies of cybersecurity. A public-facing server carries certain inherent risks—anyone can access it and attempt to hack it. But you can minimize the potential of that happening by putting your database, file servers, and other valuable resources behind a firewall.

5. Eliminate the risk

Strategy: An avoidance strategy may eliminate the risk by removing the source. This strategy involves altering practices, processes, or elements of a project/event to entirely avoid the risk rather than just minimizing its potential impact. This approach is often used when a risk poses a significant threat and when the potential consequences are unacceptable regardless of any management options.

Example: A manufacturing company may be using a highly toxic chemical in its production process that poses environmental hazards and serious health risks to workers. In response, the company eliminates the use of this chemical entirely, opting for a safer alternative that ensures compliance with safety regulations and reduces risks.

6. Buffer the risk

Strategy: Sometimes, you can minimize risks by adding extra resources to the situation, whether it be time, money, or personnel. Buffering a risk reduces the chances of a negative outcome, shores up vulnerabilities, and makes undertaking the activity more manageable.

Example: Using a crane to hoist heavy equipment to the roof of a building presents a variety of hazards to both people and property. However, you can buffer most of them. In this case, you could build extra time into the schedule, train and place spotters on both the ground and the roof, provide ample instructions, and have plenty of hands on-deck to guide the equipment to its destination.

7. Quantify the risk

Strategy: Many business opportunities come with potentially costly risks. To determine whether the positives are enough to justify the potential impact of the risk, you’ll need to quantify, analyze, and compare both sides. Note also that the risk or the reward may evolve throughout the activity.

Example: Many pizzerias rely on deliveries to sustain their business. Thus, having to cut them off can be disastrous for profitability. Sending a driver out in light rain to make a full night of deliveries is likely worthwhile; revenue will be high, and the risk remains low if they drive carefully. Conversely, sending them out for a single delivery in a snowstorm is a bad idea—the reward is low, and there’s a much higher chance of a negative outcome. The scenarios in between may be more difficult to distinguish as worth or not worth the risk, so it serves to spend time assessing potential risks in advance.

8. Monitor the risk

Strategy: Hazards and the risks they present are rarely static. Using a two-way communication solution allows you to monitor risks and stay aware of conditions affecting your employees and facilities, push out urgent updates, and field requests for help or information.

Example: Employees at restaurants, coffee shops, and retail outlets often face rapidly evolving situations during civil unrest. A two-way communication system allows you to get real-time updates from employees and provide immediate support on whether they should shelter in place, evacuate, or wait for help from law enforcement.

9. Develop contingency plans

Strategy: Even the best-laid plans often go awry. Even if you think you have a hazard handled, consider its impact and whether a backup plan can reduce the risk even further.

Example: Contingency plans are a key element of travel risk management. If you need to send people into regions where conditions are unpredictable due to natural disasters, poor infrastructure, or unexpected circumstances, having backup arrangements can minimize the risks involved in the trip.

10. Leverage best practices

Strategy: Life occasionally throws curveballs, but most of the risks your company faces won’t be novel. Rather than reinventing the wheel, leverage the best practices that groups like the Occupational Safety and Health Administration (OSHA) and the International Organization for Standards (ISO) have developed for common operational risks.

Example: Construction technology continues to evolve, but most inherent risks are decades old. OSHA provides standards, training programs, and resources to help mitigate most of the risks involved in the industry. Business leaders can implement all of those without extensive research or experimentation.

Putting Risk Mitigation Plans Into Action

Risk reduction is an ongoing journey for any organization. Operations will change, new risks will evolve, and your risk management plans will need to grow accordingly.

Using the strategies covered in this article, you can work with key stakeholders to train your team, document your risk mitigation plan’s effectiveness, and refine it over time. Life will never be hazard-free, but with sufficient planning and practice, you can rest easy knowing you’ve minimized the threats to your team and streamlined disaster recovery.