Risk Mitigation

Risk mitigation processes can be sped up with the help of modern solutions that use A.I. technology to deliver better performance. Risk management solutions provide businesses with a platform where they can monitor risks and manage risk mitigation activities simultaneously. The risk manager is automatically notified by the solution when a risk is detected. The manager can create an action item from the notification and assign the work to a risk officer. Risk management solutions provide streamlined and automated workflows which allow risk teams to collaborate with maximum efficiency and achieve higher performance levels.

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Risk management is often thought of as one function, but a closer look will reveal that it is a domain with multiple functions, processes, and departments. This becomes apparent when you look at the way risk management technology itself has developed. We can divide the many different processes and functions of risk management into two major categories; tracking and mitigation. Both are critical to any risk management strategy, but both require a different approach and a different set of tools.

Getting better at managing risks while also lowering risk management costs may seem like a lofty goal, but it can be achieved to a large extent if the right strategy is employed. Looking at the two risk management categories separately clarifies the steps that organizations need to take if they want to improve the efficiency of their risk management programs.

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Risk Tracking vs. Risk Mitigation

Managing risks means being able to plan for them and manage them to ensure business continuity without hurting the bottom line of the business. Organizations need to be able to identify and track risks before they can manage risk. It is impossible to manage risk without knowing about it and being able to assess its severity. Risk management requires a substantial commitment of time and resources, which is why organizations need to know which risks to prioritize when it comes to mitigation.

While both tracking and mitigation are unquestionably a part of risk management, the tools needed for both are very different. If an organization only has risk identification and tracking tools it will not be able to manage risks efficiently. Simply knowing about risk is not helpful if no action is taken to mitigate that risk. Only by having both tracking and mitigation tools in place can risk management be achieved.

Components of tracking and mitigation

Tracking and mitigation are both components of risk management, but they are also compartmented into multiple processes and functions. Here are some of the common processes used in both – note that this is not an exhaustive list because there are many specialized risk management processes for different industries.

Risk Tracking Processes

  • Risk Identification
  • Risk Assessment
  • Risk Monitoring
  • Risk Predictions

Risk Mitigation Processes

  • Corrective actions
  • Task Management
  • Periodic reviews

Risk Tracking Processes

Risk tracking processes deal with the identification and measurement of risk levels.

Risk identification

Identifying risks is the first step to managing risks. Businesses now employ risk technology which allows them to detect emerging risks which will soon be affecting the organization. Speed matters when it comes to identifying risks. Detecting risks earlier has two advantages; it gives the business more time
to put risk mitigation plans in place and it is also easier to deal with risks when they are smaller.

Risk Assessment

There are hundreds, even thousands of risks affecting organizations at all times. Businesses must prioritize the most significant risks to focus on for mitigation. The significance of risks depends on two factors; its probability and its severity. Businesses must thus assess all risks based on both factors to determine which risks need immediate action and which risks can just be monitored for now.

Risk Monitoring

Risks are dynamic in nature – they grow, and they subside. It is thus vital that any risk that has been identified be monitored for any changes in probability or severity. Risk monitoring is essential for any business that wants to proactively mitigate risks; being proactive is the most efficient and successful risk mitigation strategy.

Risk Predictions

Businesses know the importance of having the time to prepare for emerging risks which is why there is a lot of focus on risk predictions, trends, and insights. Risk predictions are generated based on the latest risk intelligence and by studying trends in historical risks. Automated risk management solutions can take internal risk data from the organization and combine it with external risk data from the markets and combine it all to predict how risks may look like in the next quarter.

Risk mitigation processes

Risk mitigation processes focus on the activities and tools that allow businesses to eliminate or minimize the damage caused by risks.

Risk mitigation processes focus on the activities and tools that allow businesses to eliminate or minimize the damage caused by risks. Click To Tweet

Corrective Actions

Determining the corrective actions that need to be taken in order to mitigate risks is the first step in mitigating risks. The type of action needed depends on the type of risk that is being mitigated. Some risks are mitigated by retraining employees, others by changing policies, and so on.

Task Management

Task or activity management is critical for efficient risk management. Each risk mitigation effort is a separate task and the progression on these tasks must be monitored. Risk management solutions that provide a platform where these tasks can be managed and viewed can significantly improve an organization’s risk management successes.

Risk Controls

Risk controls are the protective measures and barriers placed by organizations to mitigate or eliminate risks. There are hundreds of controls active in a mid-sized organization. Each department chooses its own controls depending on its risks and business requirements.

Periodic Reviews

The dynamic nature of risks means that businesses need to do periodic reviews and tests of the controls to ensure that they are performing as expected. Testing the controls is a resource-intensive task, but it can be streamlined through a risk solution that features automation for control testing.

Modern risk management platform like Predict360 combine all these solutions under one platform. If you want a specific risk tool or want an overhaul of your organization’s risk management framework, get in touch with our risk experts to see a demo of how Predict360 can benefit your organization.

Risk Mitigation Strategies

The key to success is to have the right risk mitigation strategies in place backed with the right tools and technology. There are two components to risk mitigation activities – timeliness and effectiveness. It is critical for the business to have effective tools and controls in place to mitigate the risks that threaten the business. A risk management platform helps businesses collaborate painlessly which results in efficient risk mitigation activities. Instead of having to first investigate the issue and then share the information, all the information is made available to all the stakeholders which makes it easy for them to fulfill their role.

Mitigating Risks at the Right Time

The question isn’t just efficiency – the timeliness of the risk mitigation activity also makes a major difference. A business can only mitigate risk once the management is aware of the risk. This means that the risk needs to be caught in an assessment. The effectiveness of risk mitigation decreases if the risk was detected too late – it may have already caused some damage to the organization at that point. Even the most effective risk mitigation strategy will not be able to undo the damage that has already been caused, but it will be able to contain the damage.

Businesses that have the monitoring and analytical capabilities to detect emerging risks can be much more productive with their risk mitigation activities. The best time to know about risk is before the risk is actualized; a business that can predict an emerging risk correctly will be able to avoid all damages that could have been caused by the risk. Knowing about an emerging risk before the rest of the industry realizes it can also be a major competitive advantage for businesses.

Enterprise Risk Management Software

Detecting emerging risks requires real-time monitoring and analysis of internal and external metrics. There are two parts of the analysis that come together to provide insights and risk predictions. The first part consists of internal data that can highlight vulnerabilities in the risk management framework. The second part consists of external data that shows emerging and changing factors in the risk portfolio of the organization. Knowing the vulnerabilities of the business ensures that the business focuses on domains that can cause the most damage. If there is an emerging risk that lines up with an existing vulnerability then the business will know that it needs to prioritize the mitigation of said risk.