From financial investments to legal challenges, every business takes on some level of risk. While it’s impossible to completely avoid all potential threats, forward-thinking companies can take the initiative to identify and mitigate the most pressing risks before they become significant (read: costly) issues.
Put simply, by making risk mitigation strategies part of your standard operating procedures, you limit your liability and stay on track to success.
What Is Risk Mitigation?
Risk mitigation limits the impact of potential threats on an organization. The process involves identifying those risks, assessing their severity and finding ways to manage them—or eliminate them completely if possible.
Risk mitigation isn’t a one-and-done solution. Rather, it is an ongoing process that evolves as the organization expands and encounters new challenges.
Why Is Risk Management Important?
The risk management process equips businesses with valuable information about how various factors could impact their operations, ultimately giving them the resources to manage issues when they do occur. When implemented properly, a risk management strategy can save money, increase efficiency and protect business assets. It also reduces incident response time, helping operations return to normal quicker.
Common Business Risks
Each business has its own unique cocktail of risks, hazards and threats. A manufacturing plant, for example, would have a far different risk management strategy than a doctors’ office.
However, there are a few main categories that encompass the most common business risks:
Legal
If your business violates laws or assumes liability for damages to another party, it may be vulnerable to legal consequences.
Compliance
Failing to meet regulatory standards can harm your reputation or lead to financial damages, such as fines or sanctions.
Strategic
Investing in a risky business strategy has the potential to impact company finances and overall productivity.
Reputational
Your policies, partnerships and public statements can all pose potential risks to your reputation.
Operational
Operational risks occur when day-to-day activities interfere with your business’s goals or lead to financial losses. They can include policy violations, improper training and general workflow inefficiency.
While it may not be within your power to control some external risks, you can still create response plans and safeguards to protect your assets.
Identifying and Assessing Risks
The first step in any risk mitigation strategy is outlining which potential issues pose a risk to your organization. Start by conducting a risk assessment, where you list hazards or risk factors, who they could affect, and the likelihood of them occurring. Include both internal risks, such as human error within your organization, and external risks, such as economic conditions.
Once you have a comprehensive list of threats to your business, determine which risks have the highest priority. Risks that are likely and have a severe potential impact should be the first issues you address.
Common Risk Mitigation Strategies
There are several approaches to risk management, ranging from fully eliminating risks to monitoring risky conditions:
Risk avoidance
Your company can choose not to engage with certain practices or use hazardous materials to completely avoid the risks they pose. This approach could involve eliminating inefficient processes to reduce operational risk. For example, if you’re moving to cloud-based processes, you can avoid certain risks associated with data migration—if you prepare accordingly.
Risk transfer
If you work with a partner who can assume liability for potential risks, you can transfer the risk away from your organization. For example, companies engage insurers to limit their regulatory and legal risk.
Risk reduction
When you can’t fully eliminate a risk, implement controls and processes to help your team control those risks. For example, you may reduce a financial risk by carefully managing your budget or reduce the risk of data breaches by requiring stronger passwords.
Risk acceptance
For risks you can’t control or avoid, it’s important to develop contingency plans to guide your response when issues do occur.
Risk monitoring
Keeping track of high-risk situations helps you act quickly in the event of a threat. A company may mitigate cybersecurity risks by constantly monitoring its networks for potential threats, allowing for an immediate response from its IT team.
Best Practices for Implementing Risk Mitigation Strategies
When employing risk management techniques in your organization, create a thorough action plan based on your initial risk assessment. Starting with your high-priority risks, develop a timeline for implementing controls or switching to processes with a lower risk level. Introduce metrics to determine the current risk level, then regularly track those key performance indicators (KPIs) to measure your progress.
Be prepared to uncover new risks when introducing new processes and continuously adjust your approach based on your KPI data and direct feedback from your team. Because risk assessment is an ongoing commitment, you should regularly reassess your most important threats. Doing so also allows you to incorporate evolving best practices in your industry and take advantage of the latest tech solutions for risk management.
As you introduce new risk management initiatives, communicate with your stakeholders and team members about the importance of these strategies. Communication creates a risk-aware, progress-oriented culture that’s invested in creating a safe, efficient and productive environment.
Overcoming Risk Mitigation Challenges
Risk mitigation is based on addressing threats and hazards, meaning that it’s a challenging process by nature. Here are a few roadblocks you may encounter when enacting your risk management strategy, plus tips for overcoming them:
- Limited resources – Businesses are exposed to a seemingly endless list of potential risks, with only a limited budget to address them. Focus on addressing high-priority items first to get the greatest impact from your available resources.
- Resistance to change – Often, people prefer their current way of doing things, even if it involves a higher exposure to risk. Seeking feedback from your team and involving them in the risk management process gives them more agency over these changes and encourages organizational buy-in.
- Complex risk landscape – Legal, regulatory, financial and operational risks constantly change, making it difficult to keep up. Working with a risk management partner or consultant can help you stay on top of these changes.
- Lack of data – Conducting a risk assessment typically requires thorough documentation of previous issues and their impacts. The sooner you start tracking risk-based KPIs, the more information you’ll have for future assessments.
Mitigating Risk With Helixstorm
Effective risk mitigation isn’t just a one-time project—it should be built into every aspect of your business. Every choice you make can increase or decrease the likelihood and severity of risks in your organization. By strategically identifying and assessing risks, you can keep significant threats at bay and be agile enough to respond when issues occur.
At Helixstorm, we understand the threats associated with managing your data and operating IT systems. Our managed backup services help you identify and monitor your IT risks, allowing you to recover your information and respond to system failures in record time.
Curious about how the right IT partner can help you protect your business? Reach out to our team today.
