Risk mitigation action

Success Problem

What is the difference between risk mitigation and risk avoidance?

Impact

Risk mitigation is a process of searching, planning and realizing the risk mitigation actions. It is used for unacceptable risk, which is the opposite to the acceptable risk. Risk mitigation actions include the risk avoidance or reduction of the event probability and the risk transfer or the risk impact reduction under the limit for acceptable risk.

Recommendation

Basic risk mitigation actions are: 1. active, „offensive“ methods: • limitation of the risk occurence, • improvement of own power, • cooperation, 2. passive, „defensive“ methods: • limitation of the risk impacts (e.g. by the means of announcing and applying the project changes, by the means of creating the resource allowances or by the means of alternate ways of activity performance), • full, or at least partial risk transfer to other project stakeholders, or risks distribution between the stakeholders, • risk avoidance. In spite of risk mitigation it is necessary to allow for the residual risk. By risks and opportunities management it is necessary to make provision for the possibilities of the specific stakeholders to mitigate risks or to use the possibilities. For example the building contractor does usually not have direct impact on the quality of the building documentation. Some procurors „insure“ themselves so that coerce the contractor to accept the risk of bad documentation. They can succeed, because the competitor interested for contract has weaker negotiating position. However, the procuror „wins“ only temporarily. If the risk appears, looses not only the contractor, but the procu-ror too.

Category

• Risk & Opportunities