how does a business plan for risk mitigation

Risk Mitigation Strategies: Types & Examples (+ Free Template)

Effective enterprise risk management is more important than ever. A recent 2023 State of Risk Oversight Report by NC State University shows that while two-thirds of business leaders (out of 454 respondents) acknowledge escalating risks, only a third are geared up to tackle them.

This points to a serious disconnect between the organization’s needs and its risk management strategy. No plan is bulletproof, but effective preparation and monitoring will help you minimize risks and their impact on business.

In this article, we explore the different risk mitigation strategies and how you can implement them to protect your organization’s performance and stability.  

What Is Risk Mitigation?

Risk mitigation is a proactive business strategy to identify, assess, and mitigate potential threats or uncertainties that could harm an organization’s objectives, assets, or operations. It entails specific action plans to reduce the likelihood or impact of these identified risks. 

Conversely, risk management is a broader, more comprehensive process that involves various stages like risk identification, assessment, response, and monitoring. 

While risk mitigation focuses on direct actions to eliminate or diminish threats, risk management encompasses the entire life cycle of dealing with risks. 

They may sound similar, but risk mitigation is a subset and vital component of the risk management process.

Why Is Risk Mitigation Important?

The stakes are high, according to the 2023 State of Risk Oversight Report. We're seeing near-record levels of risk events and complexities across organizations.

So what does a robust risk mitigation plan offer you? For starters, it's not about ignoring risks, but rather tackling them head-on with actionable steps. This ensures you have a business continuity plan in the face of disruptions. 

An effective risk mitigation process also provides a clearer picture of potential obstacles, which helps with strategic decision-making. This helps manage operational risks and create a resilient supply chain . It also assures employees that they are working with a company that prioritizes job security.

But risk mitigation isn't all defense—it also sets you up to seize growth opportunities. By identifying and minimizing risks, you can make calculated moves that optimize your business portfolio .

What Are The Types Of Risks?

Your risk mitigation strategies should be tailored to your business, which means it can't be a carbon copy of another organization's risk mitigation strategy. The risks you face will vary based on your industry, sector, and other unique factors.

Some of the most common types of risks include:

• Competitor risk: Threats from rival organizations.
• Economic risk: Vulnerabilities due to economic fluctuations.
• Political risk: Impact of political factors.
• Financial risk: Exposure to financial uncertainties.
• Operational risk: Daily hazards in operations , including cybersecurity risks. 

📚You can learn more about risk types and strategies to mitigate them in this article .

What Are The Risk Mitigation Strategies?

Described below are the most common risk mitigation strategies.

Tip: You should always start with a complete risk analysis to pick the right strategy for your business.

Risk avoidance strategy

The most straightforward way to deal with risks is to remove them entirely. This involves steering clear of any actions or situations that could harm your business. But be cautious: sidestepping one risk might require sacrificing other resources.

A large technology company plans to launch a new product in an international market, but a risk assessment uncovers considerable regulatory and political obstacles. 

Opting for a risk avoidance strategy, the company chooses not to enter the new market, eliminating these high-stakes risks. Instead, it reallocates resources to bolster existing markets or pursue other low-risk opportunities. 

While this approach removes immediate risks, it also sacrifices the potential revenue and growth the new product could have generated in that market.

Risk transfer strategy

Sometimes you can pass risks on to someone else. This usually involves using contracts, insurance, or outsourcing . This is a good strategy if it's cheaper to pay another company to take on the risk than to deal with it yourself.

💡 Examples:  

• Work with a third-party logistics provider (3PL) for your shipping and delivery needs. The contract often includes clauses that transfer the risk of damaged or lost goods during transit to the 3PL. Upon damaged products, the 3PL is liable to compensate your business for the losses.
• Pay an insurance company a small fee to avoid the full financial implications of unforeseen events like accidents.

📚 Recommended read: Unlocking The Power Of Logistics Strategy To Achieve Supply Chain Excellence

Risk acceptance strategy

Sometimes taking a risk is a good choice, especially if the potential reward is high or the likelihood of problems is low. Each business has its own comfort level for risk and uses that to decide which risks are worth taking. It’s also better to accept risks if the costs of avoiding them are too high.

Many startups know they have a high chance of failing early on. But they're willing to take that risk because the possible rewards, like growth and profit, make it worthwhile. 

If you’re following this strategy, you must constantly monitor the threat level. If it rises above acceptable risk levels, or if your risk appetite changes, you might need to switch to a different strategy to protect your business.

Risk reduction strategy

In cases where you can’t avoid or accept the risks, it’s best to pursue measures to reduce their impact altogether. Risk reduction involves implementing proactive and concrete actions to make a potential problem less severe.

💡 Examples: 

• An oil drilling company in a hurricane-prone region may invest in advanced high-tech weather systems to better predict stores. This move will help them to prepare in advance and reduce the likelihood of costly disruptions due to natural disasters. 
• If you identified that you’ll run out of funds to complete a project, you could switch to more affordable materials or scale back the project size. You could also look for extra funding. Each option helps lower the risk of running out of money before completing the project.

Risk monitoring strategy

Risks are an ongoing fact of doing business and carefully monitoring them will ensure that mitigation measures remain effective. Risk monitoring involves regular evaluations and adjustments to strategies to address changing circumstances. 

💡 Example: 

A manufacturing company can continually monitor supply chain risks like supplier reliability, geopolitical issues, and market trends. If there are potential disruptions, they can take timely actions to adjust sourcing strategies or secure alternative suppliers.

What Are The Steps To Mitigate Risks?

The following steps will help you identify risks and implement a responsive risk mitigation strategy:

1. Understand what you’re up against

Systematically examine all the possible risks to your business by conducting an internal and external analysis. You can use the SWOT analysis to identify the current and future state of your business. Pay attention to the “Threats” quadrant that highlights potential risks. 

You can also use other strategic analysis tools like PESTLE Analysis or Porter’s 5 Forces to analyze the business’s external environment for any potential threats. 

💡Involve key stakeholders to gain a diverse perspective and access to insights that may not be immediately apparent. They can help you see what’s happening on the front lines so you can assess risks accurately.

2. Assess and prioritize the risks

After listing all the possible risks, it’s time to analyze the probability of their occurrence and the potential negative impact. You can use a risk matrix to help you assess and prioritize risks based on their likelihood and impact. This will help you focus your resources on the most critical risks.

💡While the risk matrix is easy to read and use, it often relies on qualitative judgments. This can sometimes result in poor resource allocation. To avoid this, whenever possible, convert risks into monetary terms. This provides a more accurate picture of how each risk could financially impact your business.

3. Prepare a plan to execute your risk mitigation initiatives

Once you’ve identified and categorized the potential risks to your business, it’s time to create an action plan. For each identified risk, decide on the most suitable approach: will you avoid, mitigate, transfer, or simply accept it?

Once you've determined your approach for each risk, allocate the needed resources. This includes people, money, and time devoted to implementing the chosen risk mitigation strategies . Have a backup with contingency plans for risks that may not be fully addressed by your initial strategies.

💡You can use Cascade’s Risk Mitigation Strategy Plan Template to cover all the key elements of an effective strategy. 

4. Execute your strategy and monitor risks 

Risks are always changing. That's why you need to continuously keep an eye on them to make sure your mitigation plans are up-to-date. Establish regular check-ins, such as daily or weekly meetings, to quickly assess the status of your risk mitigation strategies. 

To make this process even more efficient, use specific metrics tied to the risks you're managing. Set up triggers that alert you when it's time to take extra steps.

💡Look for strategy execution tools like Cascade that integrate seamlessly with various business platforms. This allows you to bring all your key business data together in a centralized hub, making it easier to stay on top of risks and adjust your strategies as needed.

5. Update risk and adapt your plan

As your business landscape evolves—whether due to market shifts, technological upgrades, or internal developments—your risk mitigation plan must keep pace. Not only can new risks arise, but the importance of existing risks can change as well.

To make these adjustments more data-driven, you can use Cascade's reports . 

These reports help you pinpoint any threats, monitor risks, and keep your team aligned with updated priorities. By constantly refining your plan, you ensure it remains effective in a shifting environment.

Mitigate Risks And Master Chaos With Cascade 🚀

To be resilient and successful, it's crucial to spot and neutralize threats before they escalate. Instead of being reactive, the key is to be proactive—maintaining financial stability, safeguarding your reputation, and staying ahead of the competition.

With features like alignment and collaboration, real-time analytics, and data tracking in one place, Cascade empowers you to detect and manage risks with confidence. 

Our strategy execution platform integrates various data sources, giving you centralized visibility over your execution engine. This insight enables you to clear dependencies and mitigate potential risks faster to improve your odds of success. 

Curious? Sign up for free or book a 1:1 with Cascade strategy expert . 

More related resilience and risk management strategy templates: 

• 16 Business Continuity Plan Templates For Every Business
• Operational Risk Assessment Template
• Healthcare Risk Assessment Template
• Compliance Risk Management Plan Template
• Risk Response Plan Template

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In the ever-evolving business landscape, risks and uncertainties are as inevitable as change itself. But are these risks merely stumbling blocks, or can they be stepping stones to greater resilience and success? 

Whether you’re an entrepreneur or a seasoned corporation, understanding and effectively managing risks is pivotal to the longevity and prosperity of your business.

We will explore the strategies successful businesses use to anticipate potential threats and turn them into opportunities for growth and innovation, uncovering the art and science of risk mitigation. We’ll examine every critical aspect of risk appetite, from financial risks to operational disruptions, technological challenges, and unforeseen market shifts.

Let’s transform risk into reward, uncertainty into certainty, and challenges into triumphs.

Table of contents

What is risk mitigation, the importance of risk mitigation for businesses, benefits of risk mitigation, types of risks your business may encounter, types of risk mitigation strategies, best practices for mitigating risks, how leantime can help mitigate risk, key risk indicators (kris) and early risk identification, risk mitigation as part of the broader risk management process, leveraging best practices and industry standards.

Risk mitigation refers to minimizing potential risks that could negatively impact a project or business. This is achieved by creating and implementing a plan to manage, eliminate, or reduce the occurrence of setbacks. Once the risk mitigation plan is executed, it is monitored to track progress and determine whether any adjustments are required.

“In brief, risk mitigation refers to the strategies and methods implemented to reduce risk to an acceptable level for the business. While adopting a risk management plan from another business may be tempting, your plan should be tailored to your specific business strategy.”

Investing time in developing a risk assessment can play a significant role in maintaining a healthy relationship with clients and preventing loss of business. Let’s examine what you aim to achieve when reducing risk factors in more detail.

In today’s dynamic and uncertain business landscape, effective risk mitigation strategies have become more critical than ever before. Businesses must proactively identify, evaluate, and mitigate all potential risks that could impact their operations, reputation, and bottom line.

Whether financial, operational, legal, or strategic, every type of risk can have significant consequences for a business. Therefore, they must adopt a comprehensive risk management approach, including risk assessment, treatment, and monitoring.

The business can maintain stability, protect its assets, and ensure long-term success despite the increasingly complex and uncertain business environment.

A risk mitigation strategy offers numerous benefits, including improved decision-making, reduced financial loss, enhanced operational efficiency, and increased stakeholder confidence.

With these types of risk mitigation used, it is essential to understand the different types of risks that your business may face. By identifying these risks, you can develop appropriate mitigation strategies to reduce their impact on your organization. Some common types of risks that may be encountered include:

Compliance Risks

These and other risks are associated with the potential failure to comply with laws, regulations, and industry standards that apply to your business. Non-compliance can result in fines, penalties, and damage to your company’s reputation.

Legal Risks

Legal risks involve potential litigation or disputes arising from contractual disagreements, employee issues, intellectual property infringement, or other legal matters. Addressing legal risks may require the involvement of legal counsel and could lead to costly settlements or judgments.

Strategic Risks

Strategic risks are the potential negative consequences that can arise from the decisions and actions taken by your business. These risks can arise due to various factors, such as poor market positioning, competitor actions, or ineffective business strategies. They can adversely affect the overall success of your business.

With risk mitigation, it is important to continually evaluate and adjust your business plan to stay ahead of potential threats. This may involve conducting market research, examining emerging trends, and developing contingency plans that can be implemented quickly in response to unforeseen events.

By effectively managing strategic risks, you can increase your business’s resilience and improve its chances of long-term success.

Reputational Risks

Reputational risks are among the most significant threats that a company may face in today’s highly competitive business environment. They can arise from various sources, such as negative publicity, social media backlash, or customer dissatisfaction. They can damage a company’s reputation, making it harder to attract and retain new customers and ultimately impacting its bottom line.

To mitigate risk, it is vital for companies to maintain open communication with all stakeholders and respond proactively to any issues that may arise. It is crucial to identify possible risks, assess their impact, and develop a comprehensive strategy to address them.

This strategy should include measures to monitor and manage online and offline conversations about the company and respond quickly and effectively to any negative comments or feedback.

In addition, companies should establish clear policies and procedures for addressing reputational risks, including guidelines for communicating with stakeholders, handling crises, and managing social media.

They should also invest in training their employees to handle reputational risks and ensure that everyone in the organization understands the importance of protecting the company’s reputation.

Overall, managing reputational risks requires a proactive and strategic approach. By maintaining open communication with stakeholders, monitoring conversations, responding quickly and effectively, and investing in employee training, companies can protect their brand image and public perception and ultimately ensure their long-term success.

Operational Risks

Operational risks encompass any factors that may occur that could disrupt your business’s day-to-day operations, such as equipment failure, supply chain disruptions, or human error.

To minimize operational risks, it is crucial to implement effective management processes, maintain up-to-date technology and equipment, and ensure employees are well-trained and follow established procedures.

In an ever-changing business landscape, it’s crucial to have a solid understanding of the common strategies to protect your organization from potential hazards. These strategies can help you navigate challenges and reduce risks’ overall impact.

Let’s explore the four common strategies for managing and reducing risks:

Avoidance is a proactive approach to risk mitigation, where the business takes measures to prevent the risk from occurring in the first place. This might involve altering business plans or processes to eliminate the potential risk. One example, a company might decide not to enter a new market with high compliance risks, or it might choose to discontinue a product line with significant legal risks.

Reduction focuses on minimizing the likelihood of a risk happening or reducing its impact if it does occur. This strategy involves implementing processes, technologies, or training that can help mitigate the potential negative effects of a risk.

For instance, a business might invest in employee safety training to reduce the chances of workplace accidents or implement strong cybersecurity measures to protect against data breaches.

Transference

Transference involves passing the risk consequence to a third party, such as an insurance company, a contractor, or a supplier. By transferring the risk, companies can effectively manage a risk event’s potential financial and operational implications.

Examples of risk transference include purchasing insurance policies to cover potential losses or outsourcing certain tasks to specialized vendors who can better manage specific risks.

Acceptance means embracing the risk as it stands, either because the possibility of reward outweighs the potential negative consequences or because the probability of the risk occurring is minimal or its impact is minor.

This strategy is often used when the cost of mitigating the risk is greater than the potential loss, or when the risk is deemed an inherent part of doing business. In these cases, companies might choose to accept the risk and focus on managing the consequences if the risk event occurs.

In conclusion, understanding and implementing these common risk mitigation strategies can help your business effectively manage potential threats and pave the way for continued growth and success.

In order to effectively manage and reduce risks in your business, it is essential to follow a set of best practices. These practices aim to provide a systematic and comprehensive approach to risk management, ensuring that potential threats are addressed proactively.

Identifying Risks

The first step in mitigating risks is to identify them. This involves thoroughly analyzing your business operations, processes, and environment to uncover potential threats and vulnerabilities. By identifying risks early, taking actions and appropriate measures to prevent or minimize their impact on your business.

Assessing Likelihood and Impact

Once you have identified the different risks, assessing their probability of occurrence and potential impact on your business is crucial. This will help you determine the severity of each risk and prioritize your risk mitigation efforts and resources accordingly.

Understanding the probability and repercussions of risks enables you to make informed decisions about which risks require immediate attention and which can be monitored over time.

Prioritizing Risks

This is a critical step in the risk mitigation process. By ranking risks based on their probability and impact, you can focus your efforts on taking action on the most significant threats first. This ensures that resources are allocated efficiently and that high-priority risks are managed effectively.

Treating Risks with Appropriate Actions

Once you have prioritized risk levels, creating and implementing appropriate risk mitigation strategies is essential. These can include avoidance, reduction, transference, or acceptance, depending on the nature and severity of each risk.

The choice and types of risk and strategy should be tailored to your specific business needs and objectives, ensuring that risks are managed to align with your overall goals.

Monitoring Risks Regularly

Risk management is an ongoing process that requires continuous monitoring and assessment. Regularly reviewing the status of identified risks and tracking the effectiveness of implemented mitigation strategies is essential for maintaining a proactive approach.

This also allows you to identify new risks that may emerge and adapt your strategies accordingly.

Reporting on Risks to Stakeholders

Effective communication is a key component. It is important to keep stakeholders informed about identified risks, their potential impact, and the steps being taken to mitigate them. Transparent reporting fosters a culture of accountability and trust, ensuring that all parties are aligned in their efforts to manage and mitigate risks.

Following these best practices, you can create a strong business risk management foundation. Utilizing project management software like Leantime can aid in reducing risks through features such as customization, automation, collaboration, and visualization, ensuring a thorough approach to handling and controlling potential business risks.

Effective risk mitigation requires a comprehensive approach that incorporates various tools and strategies. Leantime’s project management software offers several features that can help organizations manage and risk avoidance more effectively:

Customization Features

Leantime provides customization features that allow your business and organization to tailor their risk management processes to their unique needs. These customization features enable the software to be tailored to the unique requirements of each organization, ensuring that it can effectively support its risk management processes.

By providing customizable features, Leantime makes it easier for organizations to identify and manage other business risks promptly, which can lead to better operational efficiency, increased productivity, and improved overall performance.

With Leantime, businesses and organizations can have peace of mind knowing that their risk management processes are customized to their specific needs and are being managed effectively.

Automation to Streamline

Automation is a key aspect of risk mitigation, as it helps to reduce the likelihood of human error and improve efficiency. Leantime offers automation features that can streamline risk mitigation processes, such as automated task assignments and notifications, allowing them to stay on top of certain risks and take prompt action when needed.

Collaboration Tools for Effective Teamwork

Effective risk mitigation often requires collaboration among team members and across departments. Leantime’s collaboration tools, such as shared workspaces and real-time communication features, facilitate teamwork and ensure that all stakeholders are on the same page when it comes to addressing risks.

Visualization for Better Understanding

Understanding the potential impact of risks is crucial in developing appropriate mitigation strategies. Leantime offers visualization features, such as risk heat maps and Gantt charts , that help employees better comprehend the severity and likelihood of risks, enabling them to make more informed decisions on how to address them.

Centralization of Information for Easy Access

Having a centralized location for risk information is essential for efficient risk management. Leantime provides a central hub where you can store and access all relevant risk data, making it easier for team members to stay informed about potential risks and take appropriate action to mitigate them.

Effective risk mitigation involves understanding the importance of Key Risk Indicators (KRIs) and recognizing the benefits of assessing risks. This section delves into these critical aspects of risk management.

Importance of KRIs

Key Risk Indicators (KRIs) are essential metrics that measure the likelihood of an adverse event occurring and its possible effect on the organization. These indicators help identify potential threats and prioritize their mitigation efforts. 

By monitoring KRIs, most organizations can proactively address risks before they escalate and cause significant damage. In the context of risk mitigation, KRIs serve as a valuable tool to assess the effectiveness of current strategies and make necessary adjustments to protect the business.

Benefits of Early Risk Identification

It’s important for successful risk mitigation. Identifying risks at an early stage allows the organization to address them more effectively and reduce their potential impact. Some benefits include the following:

• Greater Preparedness: Early risk identification enables organizations to develop comprehensive risk mitigation plans, ensuring that all potential issues are accounted for and dealt with accordingly.
• Better Resource Allocation: By identifying risks early, an organization can allocate resources more efficiently, prioritizing high-risk areas requiring immediate attention and minimizing potential harm.
• Increased Adaptability: Early identification of other risks allows organizations to adapt and respond to changes more effectively, reducing the likelihood of potential disruptions and promoting business resilience.

Risk mitigation is an essential component of the broader risk management process. It focuses on reducing the impact of potential risks by developing specific plans and actions to manage, eliminate, or limit setbacks as much as possible.

Connection Between Risk Mitigation and Risk Management

Risk management encompasses identifying, assessing, and prioritizing risks, followed by implementing a risk mitigation plan. These strategies are designed to address certain risks and minimize their impact on the business.

By incorporating risk mitigation into risk monitoring, businesses can proactively address potential setbacks and maintain a stable, secure, and profitable environment.

Importance of having a risk mitigation plan

A well-developed risk mitigation plan is crucial, as it helps promptly and efficiently address and identify risks. A risk mitigation plan includes essential steps such as identifying, assessing, prioritizing, treating, monitoring, and reporting risks.

Adhering to these guidelines, businesses can proficiently handle potential challenges and ensure the seamless operation of their activities.

Risk mitigation focuses on avoidance, reduction, transference, and acceptance, allowing an organization to tackle different types of risks, including compliance, legal, strategic, reputational, and operational risks. 

Leantime, a project management software, can help your team of employees mitigate risks through features like customization, automation, collaboration, and visualization. By utilizing Leantime, you can enhance their processes and ensure a successful risk mitigation plan.

Adopting best practices and industry standards is important for businesses to develop effective risk mitigation strategies. Organizations like the Occupational Safety and Health Administration (OSHA) and the International Organization for Standardization (ISO) provide guidelines and standards that can help create comprehensive risk mitigation plans.

Adopting Best Practices From Organizations Like OSHA and ISO

OSHA provides safety and health regulations for various industries, ensuring that organizations maintain a safe working environment and minimize the risk of accidents and injuries.

Complying with OSHA standards reduces the likelihood of operational risks and helps a business avoid legal and reputational risks associated with workplace accidents.

Similarly, ISO offers various international standards covering various aspects of business operations and software development, including quality management, information security, and environmental management.

By adopting ISO standards, a business can ensure consistency in its processes, reduce the likelihood of errors, and enhance its overall risk mitigation efforts.

Continuously Refining Risk Mitigation Plans

Risk mitigation is an ongoing process that requires a business to continually monitor, assess, and update their plans. By staying informed about the latest industry standards and best practices, businesses can adapt their risk mitigation strategies to address new or evolving risks.

This proactive approach to risk management ensures that the business remains resilient and can swiftly respond to potential challenges.

Leveraging best practices and industry standards is crucial to an effective risk mitigation strategy. By adopting guidelines from organizations like OSHA and ISO and continuously refining risk mitigation plans, the business can successfully navigate possible risks and secure their long-term success.

In conclusion, risk mitigation is crucial to managing a successful business. As we have discussed, a business may encounter various types of risks, such as compliance, legal, strategic, reputational, and operational risks.

To effectively mitigate these risks, companies must employ widely used risk reduction techniques like avoidance, reduction, transference, and acceptance.

One of the best ways to mitigate risks is by following a systematic approach that includes identifying, assessing, prioritizing, treating, monitoring, and reporting risks.

Implementing these practices ensures that the business is well-prepared to address potential challenges and maintain a competitive edge in their respective industries. Furthermore, incorporating risk mitigation best practices and industry standards can provide additional support in managing risks effectively.

Lastly, utilizing project manageme nt software like Leantime can greatly assist in mitigating risks. With customization, automation, collaboration, and visualization features, Leantime empowers your business to manage its risks better and ensure continued success.

As business navigates an ever-changing landscape, it is essential to prioritize risk mitigation efforts to safeguard the company’s future.

By implementing effective strategies and leveraging tools like Leantime, organizations can confidently face potential challenges head-on and maintain a strong foundation for continued growth.

Gloria Folaron

Gloria Folaron is the CEO and founder of Leantime. A Nurse first, she describes herself as an original non-project manager. Being diagnosed with ADHD later in life, she has hands on experience in navigating the world of project and product management and staying organized with ADHD.

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Updated: 7 May 2024

Contributors: Teaganne Finn, Amanda Downie

Risk mitigation is one of the key steps in the risk management process. It refers to the strategy of planning and developing options to reduce threats to project objectives often faced by a business or organization.

Risk mitigation is a culmination of the techniques and strategies that are used to minimize risk levels and pare them down to tolerable levels. By taking steps to negate threats and disasters, an organization is going to be in a strong position to eliminate and limit setbacks.

The goal of risk mitigation is not to eliminate threats. Rather, it focuses on planning for inevitable disasters and mitigating their impact on business continuity. Different types of potential risks include cyberattacks , natural disasters such as tornadoes or hurricanes, financial uncertainty, legal liabilities, strategic management errors and accidents.

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When common risk instances occur, circumstances can make them detrimental to an organization. If an organization isn’t equipped to deal with the problem, the minor issue might turn into something catastrophic, leaving the business with a significant financial burden. In the worst-case scenario, the business might need to close.

The best way to prevent this from happening is having a risk mitigation plan in place. If an event occurs, the organization has contingency plans to mitigate the damage that the organization sustains. Risk mitigation focuses on the inevitability of some disasters and is most often used where a threat is unavoidable. The purpose of the risk mitigation plan is to prepare for the worst and come to terms with the fact that one or some disasters that are listed can occur. Once that realization has been made, it's the responsibility of leadership to make sure that the risk mitigation plan is in place and ready for whatever disaster might occur. 

At the broadest level, risk mitigation requires a team of people, processes and technology that enables an organization to evaluate its risks and then create a comprehensive plan for mitigating those risks. A project management team would be the best business strategy to evaluate risks.

The risk mitigation process is not one-size-fits-all and will not be the same from one organization to the next. However, there are several steps that are relatively standard when making a thorough risk mitigation plan. These steps include recognizing recurring risks, prioritizing certain risks and implementing then monitoring the established plan.

The first step in risk mitigation is risk identification, which is the process of understanding which risks are present and assessing the threat to the organization, as well as the operation and employees. It’s important to consider a range of business risks including  cybersecurity threats  (for example, data risks and data breaches ), financial risks, natural disasters and other potentially harmful risk events that might disrupt the organization and business operation.

Once a list of identified risks has been established the next step is for the risk mitigation team to assess each one and quantify the risks. The risk levels are established in this step and will often involve checking the measures, processes and controls in place to reduce the impact of the risk.

Risk evaluation compares the severity of each possible risk and ranks them according to prominence and consequence. This is a vital step as organizations must decide which risks have the most damning effect on the organization and its workforce. Also, in this step, an organization establishes an acceptable level of risk for different areas. This will then create a reference point for the business and better prepare the resources that are needed for business continuity.

Risks can change and so can risk levels depending on several different factors. The monitoring phase in the risk mitigation plan is an important step due to these ever-changing risks. By monitoring risk, an organization can determine when the severity increases and when it decreases, then act accordingly. It’s important for the organization to have strong metrics for tracking risks. This tracking helps the organization stay compliant under different regulations and compliance requirements.

Once the risks have been assessed, prioritized and evaluated, it’s time to implement the plan. During this step, all appropriate measures should be put into place across the organization. Employees should be briefed and trained on all aspects of the risk mitigation plan. Regular testing and analysis should be done often to ensure that the plan is up to date and complies with regulations.

In this step, and further down the road, adjustments might need to be made. It’s important to make changes when the team learns something new or when there is a shift in priorities. A constant evaluation of the risk management strategy reveals vulnerabilities and enhance the decision-making process.

Like the risk mitigation process, the strategy­—or approach—an organization uses to establish a risk mitigation plan varies depending on the organization. However, there are common techniques when addressing risk. 

Risk avoidance

The risk avoidance strategy is a method for mitigating risk by taking measures to avoid the risk from occurring. This approach might require the organization to compromise other resources or strategies. Not making an investment or starting a product line are examples of such activities as they avoid the risk of loss.

Risk reduction

This approach would occur after an organization completes its risk mitigation analysis and decides to take steps to reduce the chances of a risk happening or the impact. It doesn’t eliminate the risk; rather, it accepts the risk and focuses on containing losses and doing what it can to prevent it from spreading. One example of this in the healthcare industry is health insurance covering preventive care.

Risk transference

Risk transfer involves passing the risk to a third party, such as getting an insurance policy to cover certain risks like property damage or injury. This shifts the risk from the organization onto someone else, often, an insurance company.

Risk acceptance

This strategy involves accepting the possibility of a reward outweighing the risk. It doesn’t need to be permanent, but for a given period it might be the best strategy to prioritize other risks and threats. It is impossible to eliminate all risks and is called residual risk or “left over.”

Developing a risk mitigation plan requires many moving parts and coordination across an organization. Below are some best practices when approaching and executing a risk mitigation plan.

Keep stakeholders informed 

Communicating risk across the organization is an important aspect of risk mitigation planning. Open communication across the entire organization is vital not only for the organization, but also for all the employees involved. A key risk with a high organizational impact should be communicated clearly and monitored across all departments.  

Establish a strong risk culture  

Risk culture starts at the executive level. Risk culture is the collective values and beliefs around risk that are held by a group of individuals. For complete compliance from an organization, the risk culture needs to come from business leaders and management and be communicated clearly. The importance of compliance should be firm from the very top and present throughout the organization. 

Establish risk tools

Ensure that there are strong controls and metrics in place to monitor risks. Management tools, such as a risk assessment framework can help aid in ongoing monitoring. An RAF works by monitoring which risks are high and low and provides reports for the technical and nontechnical stakeholders involved.

Conduct regular risk assessments

Keeping the organization’s risk profile up-to-date is important. Organization leaders need the most current data and reports to make informed decisions and strong action plans going forward to control risk.

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4 practical risk mitigation strategies for your business

As humans, we’re used to assessing risks; it’s part of our survival mechanisms. But limiting risk — also called risk mitigation — impacts whether a business survives.

Imagine a scenario where business leaders don’t stop to reflect on past mistakes or constantly dive into new opportunities without considering how they could impact their business — this wouldn’t be sustainable.

To effectively reduce risk within an organization, we need to understand the different types of risk and how to prevent them. In this article, we’ll cover the various types of risks, share four risk mitigation strategies, and show you how to build a plan on monday.com Work OS to help you future-proof your business.

What is risk mitigation?

Risk mitigation is the practice of reducing the impact of potential risks by developing a plan to manage, eliminate, or limit setbacks as much as possible. After management creates and carries out the plan, they’ll monitor progress and assess whether or not they need to modify any actions.

In a nutshell, risk mitigation describes the tactics and techniques that bring risk levels down to a tolerable level for the business.

Though it might feel tempting to take a page from another business’s risk management book, your plan will depend on your unique business strategy.

Taking the time to create a unique risk mitigation plan could be the difference between maintaining a strong relationship with clients and losing out on business. Let’s look closer at what you would want to achieve when you mitigate risks.

Why do we mitigate risk?

Unfortunately, ignoring risk factors won’t make risks disappear, and forging ahead without a plan may damage your bottom line. This is why risk mitigation is important.

With a concrete plan with clear action items, you can prevent risks from turning into problems that spin out of control or even prevent risks altogether.

This not only carries tangible benefits — such as keeping your business profitable — but it also has intangible benefits, such as helping you maintain a good reputation for stability within the industry and keeping internal and external stakeholders happy.

The latter is significant. In a recent survey, two-thirds of respondents said the volume and complexity of risks were near their highest level in 14 years for all types of organizations, while less than one-third described their risk management processes as mature or robust.

Those operational risks can cost time, money, and other valuable resources. If stakeholders feel the risks are too high or mishandled, that could lead to a reshuffle in management. So risk mitigation is essential, but before you can develop a plan, you need to know what risks you can face.

What are the types of risk you may encounter?

The risks you face may differ from those of another business or industry, catering to different clients or customers. That said, a few common risks include:

• Compliance risk — when a company violates external or internal rules, regulations, or standards, its reputation or finances are at risk. Companies may face losing customers or paying a fine due to breaking compliance regulations.
• Legal risk — a type of compliance risk that happens when a company breaks the government’s rules for companies. Companies facing legal risks could also get caught up in expensive lawsuits.
• Strategic risk — the result of a company’s faulty business strategy or lack thereof.
• Reputational risk — a risk that can negatively impact the company’s standing or public opinion. Reputational risks can result in profit losses and decreased confidence among company shareholders.
• Operational risk — a business’ day-to-day activities can potentially drain its profits. Both internal systems and external factors can cause operational risks.

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Many businesses organize matrices by consequences and likelihood, like the one above. Identifying which risks you’ll face is the first step toward preventing them. Generally, there are a few types of risk mitigation strategies you can use to protect your business.

What are the four risk mitigation strategies?

There are four common risk mitigation strategies: avoidance, reduction, transference, and acceptance.

With a risk avoidance strategy, you take measures to avoid the risk from occurring. This may require compromising other resources or strategies to ensure you’re doing everything possible to avoid the risk.

For example, you may face a risk where you won’t be able to complete a task for an important project due to a lack of specialists. To avoid this risk, you could hire multiple specialists in case one got sick or wasn’t available.

Of course, hiring more resources would take a bigger slice out of the budget, so assessing how much you can compromise is an important step in this strategy.

With this mitigation approach, once you’ve completed your risk analysis , you would take steps to reduce the likelihood of a risk happening or the impact should it occur.

Let’s say your budget is tight, and there’s a risk you can’t complete a particular project due to a lack of funds.

You can reduce the likelihood of that risk occurring by proactively managing the costs within the budget. In this scenario, you could choose a cheaper option for raw materials or reduce the project scope to complete it within budget, like the image below:

Transference

Transferring risks involves passing the risk consequence to a third party. For many businesses, that might involve paying an insurance company to cover certain risks.

Risk transference might also be written into contracts with suppliers, outsourcing partners, or contractors. If a project gets delayed awaiting a part or service from an external contractor, for instance, the contractor might face penalties for any loss of revenue the business incurs.

Also, if a company has employees or contractors from around the world, a global compliance adviser can help support and address the challenges inherent to extending operations across different countries.

Lastly, we have the acceptance strategy, which means accepting the risk as it stands. Sometimes, the possibility of reward outweighs the risk, and it’s more beneficial in the long run to take the chance.

It could also be that the probability of the risk occurring is minimal or the negative impact is minor. For items in this “Low” risk category, a business might have an ongoing strategy to accept the risk.

With risk acceptance, it’s vital to monitor the risk carefully for any changes to impact or likelihood of occurrence. You may also want to keep weighing the risk against your risk appetite and assess whether carrying the burden of risk continues to be the best move.

We’ve identified different types of risks and discussed several mitigation strategies. Now, it’s time to put the above into action and see how you can mitigate risks.

Practical steps you can take to mitigate risk

Risk mitigation steps need to be practical. It won’t help your business if you can’t figure out how to actually mitigate the risks you’re facing.

The following five steps will help you figure out a way forward through your risk mitigation process. Let’s break it down.

1. Identify

Before developing any plan, you may want to identify any risk that could impact your project or wider business operations. In this stage, it’s important to collaborate with a broad selection of stakeholders with different business perspectives to give yourself the best chance of identifying all possible risks.

For projects, project documentation can act as a valuable source of information. Review similar projects for hints about potential risks you might encounter.

Now you’ve got a list of all your possible risks, it’s time to assess them by analyzing the likelihood that they will occur and the degree of negative impact your business would face.

Your actions for each risk will depend on which category they fall into after your risk assessment . For example, as we mentioned earlier, you might decide to accept all “Low” category risks, reduce or transfer “Medium” risks, and avoid all “High” category risks.

At this point, you’re deciding on your mitigating action and putting strategies in place. Make sure to record each risk, its category, and your chosen prevention measures in a risk register.

This is a resource for all stakeholders to refer to and understand the plan and which actions to take if needed. A risk register will prevent confusion down the line, helping your team stay organized and aligned if risks occur.

On monday.com, you can get as detailed as necessary, and add risk owners, dates, and statuses for a fully actionable plan:

Businesses aren’t static and projects frequently change. It’s essential to regularly monitor each risk to check its category and mitigation strategy.

You can set up times in your weekly meetings or daily stand ups to quickly review risks. You can also use several statistical tools — such as S-curves — to track project progress and flag any changes in the risk profile for key variables, such as project cost and duration.

Sharing information on risks, best practices, and mitigation approaches can make your business’ risk mitigation strategy even more effective. Keeping risks at the forefront of stakeholders’ minds is vital for informed decision-making, and regular reporting may surface other risks that haven’t been identified yet.

The most effective risk mitigation strategies make risk reporting part of regular business operations by weaving it into the daily or weekly workflows. One way to easily implement reporting is with the built-in reporting capabilities and pre-built risk management templates on monday.com Work OS.

How monday.com can help you mitigate your risk

monday.com Work OS brings visibility and automation to your risk management strategy, allowing you to identify business risks across all departments and present them in a single risk register and mitigation plan.

Customization

The platform is highly customizable, so you can view, track, and report on your data at a business, functional, team, or project level, depending on your needs. With a few clicks, you can change your risk mitigation plan as things progress and alert your team or stakeholders to those changes.

Choose from pre-selected statuses to keep everyone informed, or change the text and the label color to make them your own:

Automations

The powerful automations immediately notify risk owners and stakeholders of any changes and enable them to take action. Use the monday.com Workflows Center to create custom processes that update stakeholders when important dates arrive, notify the right people when a status changes, create dependencies as needed, and much more.

Collaboration

On monday.com Work OS, it’s easy to collaborate on risk identification and categorization. Anyone can view, share, and annotate documents and tag colleagues to ask questions, gain clarity, or inform, which means everyone stays aligned and in agreement on the way ahead.

Visualization

Teams can view the strategy in several different ways according to what works for them. From the table view to dashboards, charts, Kanban, and others, it’s easy to get the full picture of events and action items.

Centralization

Lastly, keep all important files and documents in one central place. You can even create documents on monday.com with Workdocs, a tool that allows your team to seamlessly collaborate on new ideas, outlines, or proposals without disrupting each other.

You can also embed monday.com boards, dashboards, videos, and more directly into your Workdoc. Each component will automatically sync and update as you work, so nothing falls through the cracks.

Help future-proof your business with monday.com risk mitigation

It’s impossible to remove all business risks — however, early risk identification provides the best chance of mitigating them to levels your business can handle.

With monday.com, businesses can easily identify, classify, and manage risks. Take the first step towards risk mitigation by downloading our free risk register template .

FAQs about risk mitigation

What’s the difference between risk mitigation and risk management.

Risk mitigation is a part of the risk management process. While risk management encompasses the broader process of identifying, analyzing, and addressing risks, risk mitigation focuses explicitly on taking actions to reduce the probability of risks occurring and minimize their impact.

What is a risk mitigation plan?

A risk mitigation plan is essential for identifying, assessing, and reducing risks to a project or organization. It typically involves identifying likely risks, prioritizing risk preparation and responses, and monitoring and updating the plan accordingly. 

What is a key risk indicator (KRI)?

A key risk indicator (KRI) is a metric that measures the likelihood of an adverse event occurring and its possible effects on the organization. KRIs also consider the organization's ability to absorb the impact based on its current resources.

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How to Make a Risk Management Plan (Template Included)

You identify them, record them, monitor them and plan for them: risks are an inherent part of every project. Some project risks are bound to become problem areas—like executing a project over the holidays and having to plan the project timeline around them. But there are many risks within any given project that, without risk assessment and risk mitigation strategies, can come as unwelcome surprises to you and your project management team.

That’s where a risk management plan comes in—to help mitigate risks before they become problems. But first, what is project risk management ?

What Is Risk Management?

Risk management is an arm of project management that deals with managing potential project risks. Managing your risks is arguably one of the most important aspects of project management.

The risk management process has these main steps:

• Risk Identification: The first step to manage project risks is to identify them. You’ll need to use data sources such as information from past projects or subject matter experts’ opinions to estimate all the potential risks that can impact your project.
• Risk Assessment: Once you have identified your project risks, you’ll need to prioritize them by looking at their likelihood and level of impact.
• Risk Mitigation: Now it’s time to create a contingency plan with risk mitigation actions to manage your project risks. You also need to define which team members will be risk owners, responsible for monitoring and controlling risks.
• Risk Monitoring: Risks must be monitored throughout the project life cycle so that they can be controlled.

If one risk that’s passed your threshold has its conditions met, it can put your entire project plan in jeopardy. There isn’t usually just one risk per project, either; there are many risk categories that require assessment and discussion with your stakeholders.

That’s why risk management needs to be both a proactive and reactive process that is constant throughout the project life cycle. Now let’s define what a risk management plan is.

What Is a Risk Management Plan?

A risk management plan defines how your project’s risk management process will be executed. That includes the budget , tools and approaches that will be used to perform risk identification, assessment, mitigation and monitoring activities.

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Risk Management Plan Template

Use this free Risk Management Plan Template for Word to manage your projects better.

A risk management plan usually includes:

• Methodology: Define the tools and approaches that will be used to perform risk management activities such as risk assessment, risk analysis and risk mitigation strategies.
• Risk Register: A risk register is a chart where you can document all the risk identification information of your project.
• Risk Breakdown Structure: It’s a chart that allows you to identify risk categories and the hierarchical structure of project risks.
• Risk Assessment Matrix: A risk assessment matrix allows you to analyze the likelihood and the impact of project risks so you can prioritize them.
• Risk Response Plan: A risk response plan is a project management document that explains the risk mitigation strategies that will be employed to manage your project risks.
• Roles and responsibilities: The risk management team members have responsibilities as risk owners. They need to monitor project risks and supervise their risk response actions.
• Budget: Have a section where you identify the funds required to perform your risk management activities.
• Timing: Include a section to define the schedule for the risk management activities.

How to Make a Risk Management Plan

For every web design and development project, construction project or product design, there will be risks. That’s truly just the nature of project management. But that’s also why it’s always best to get ahead of them as much as possible by developing a risk management plan. The steps to make a risk management plan are outlined below.

1. Risk Identification

Risk identification occurs at the beginning of the project planning phase, as well as throughout the project life cycle. While many risks are considered “known risks,” others might require additional research to discover.

You can create a risk breakdown structure to identify all your project risks and classify them into risk categories. You can do this by interviewing all project stakeholders and industry experts. Many project risks can be divided up into risk categories, like technical or organizational, and listed out by specific sub-categories like technology, interfaces, performance, logistics, budget, etc. Additionally, create a risk register that you can share with everyone you interviewed for a centralized location of all known risks revealed during the identification phase.

You can conveniently create a risk register for your project using online project management software. For example, use the list view on ProjectManager to capture all project risks, add what level of priority they are and assign a team member to own identify and resolve them. Better than to-do list apps, you can attach files, tags and monitor progress. Track the percentage complete and even view your risks from the project menu. Keep risks from derailing your project by signing up for a free trial of ProjectManager.

2. Risk Assessment

In this next phase, you’ll review the qualitative and quantitative impact of the risk—like the likelihood of the risk occurring versus the impact it would have on your project—and map that out into a risk assessment matrix

First, you’ll do this by assigning the risk likelihood a score from low probability to high probability. Then, you’ll map out your risk impact from low to medium to high and assign each a score. This will give you an idea of how likely the risk is to impact the success of the project, as well as how urgent the response will need to be.

To make it efficient for all risk management team members and project stakeholders to understand the risk assessment matrix, assign an overall risk score by multiplying your impact level score with your risk probability score.

3. Create a Risk Response Plan

A risk response is the action plan that is taken to mitigate project risks when they occur. The risk response plan includes the risk mitigation strategies that you’ll execute to mitigate the impact of risks in your project. Doing this usually comes with a price—at the expense of your time, or your budget. So you’ll want to allocate resources, time and money for your risk management needs prior to creating your risk management plan.

4. Assign Risk Owners

Additionally, you’ll also want to assign a risk owner to each project risk. Those risk owners become accountable for monitoring the risks that are assigned to them and supervising the execution of the risk response if needed.

Related: Risk Tracking Template

When you create your risk register and risk assessment matrix, list out the risk owners, that way no one is confused as to who will need to implement the risk response strategies once the project risks occur, and each risk owner can take immediate action.

Be sure to record what the exact risk response is for each project risk with a risk register and have your risk response plan it approved by all stakeholders before implementation. That way you can have a record of the issue and the resolution to review once the entire project is finalized.

5. Understand Your Triggers

This can happen with or without a risk already having impacted your project—especially during project milestones as a means of reviewing project progress. If they have, consider reclassifying those existing risks.

Even if those triggers haven’t been met, it’s best to come up with a backup plan as the project progresses—maybe the conditions for a certain risk won’t exist after a certain point has been reached in the project.

6. Make a Backup Plan

Consider your risk register and risk assessment matrix a living document. Your project risks can change in classification at any point during your project, and because of that, it’s important you come up with a contingency plan as part of your process.

Contingency planning includes discovering new risks during project milestones and reevaluating existing risks to see if any conditions for those risks have been met. Any reclassification of a risk means adjusting your contingency plan just a little bit.

7. Measure Your Risk Threshold

Measuring your risk threshold is all about discovering which risk is too high and consulting with your project stakeholders to consider whether or not it’s worth it to continue the project—worth it whether in time, money or scope .

Here’s how the risk threshold is typically determined: consider your risks that have a score of “very high”, or more than a few “high” scores, and consult with your leadership team and project stakeholders to determine if the project itself may be at risk of failure. Project risks that require additional consultation are risks that have passed the risk threshold.

To keep a close eye on risk as they raise issues in your project, use project management software. ProjectManager has real-time dashboards that are embedded in our tool, unlike other software where you have to build them yourself. We automatically calculate the health of your project, checking if you’re on time or running behind. Get a high-level view of how much you’re spending, progress and more. The quicker you identify risk, the faster you can resolve it.

Free Risk Management Plan Template

This free risk management plan template will help you prepare your team for any risks inherent in your project. This Word document includes sections for your risk management methodology, risk register, risk breakdown structure and more. It’s so thorough, you’re sure to be ready for whatever comes your way. Download your template today.

Best Practices for Maintaining Your Risk Management Plan

Risk management plans only fail in a few ways: incrementally because of insufficient budget, via modeling errors or by ignoring your risks outright.

Your risk management plan is one that is constantly evolving throughout the course of the project life cycle, from beginning to end. So the best practices are to focus on the monitoring phase of the risk management plan. Continue to evaluate and reevaluate your risks and their scores, and address risks at every project milestone.

Project dashboards and other risk tracking features can be a lifesaver when it comes to maintaining your risk management plan. Watch the video below to see just how important project management dashboards, live data and project reports can be when it comes to keeping your projects on track and on budget.

In addition to your routine risk monitoring, at each milestone, conduct another round of interviews with the same checklist you used at the beginning of the project, and re-interview project stakeholders, risk management team members, customers (if applicable) and industry experts.

Record their answers, adjust your risk register and risk assessment matrix if necessary, and report all relevant updates of your risk management plan to key project stakeholders. This process and level of transparency will help you to identify any new risks to be assessed and will let you know if any previous risks have expired.

How ProjectManager Can Help With Your Risk Management Plan

A risk management plan is only as good as the risk management features you have to implement and track them. ProjectManager is online project management software that lets you view risks directly in the project menu. You can tag risks as open or closed and even make a risk matrix directly in the software. You get visibility into risks and can track them in real time, sharing and viewing the risk history.

Tracking & Monitor Risks in Real Time

Managing risk is only the start. You must also monitor risk and track it from the point that you first identified it. Real-time dashboards give you a high-level view of slippage, workload, cost and more. Customizable reports can be shared with stakeholders and filtered to show only what they need to see. Risk tracking has never been easier.

Risks are bound to happen no matter the project. But if you have the right tools to better navigate the risk management planning process, you can better mitigate errors. ProjectManager is online project management software that updates in real time, giving you all the latest information on your risks, issues and changes. Start a free 30-day trial and start managing your risks better.

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Risk Mitigation: What It Is and How to Implement It (Free Templates)

Only 23% of surveyed CEOs believe that they have comprehensive information about the risks of their business.

Can you confidently state that you belong in that 23%?

Even if you are not a CEO, as an employee, are you sure you know all the risks within your workplace?

If not, then keep reading.

In this article, you will learn about risk and how to manage it, specifically via risk mitigation. You are also provided with a thorough list of Process Street resources and templates . These are designed for you to gain a good understanding of business risk, risk management and risk mitigation.

This article is structured as below:

A definition of risk

• What is risk management
• What is risk mitigation
• Risk mitigation application

Risk mitigation and risk management: A broader picture

If I ask you to define risk, are you able to?

You probably have a mental picture, a word or phrase, that translates to you what risk is.

As a child, my view of risk looked very much like the above image. Watching Jaws meant I had a perpetual fear of swimming in the ocean. I was worried about the looming uncertainty that lay lurking below. Until recently, that looming uncertainty of danger was what the term risk meant for me. It is only now that I realize this understanding of risk is incorrect.

This is where I begin this article. To clarify what risk is.

Risk does not equal uncertainty.

Not all uncertainties are a risk.

Risk is a subset of uncertainties in the world – of which there are many.

The Association For Project Management defines risk as below:

An uncertain event or set of circumstances that, should it occur, will have an effect on achievement of objectices- What is risk management? , APM

From this definition, we can gather that risk is uncertainty with repercussions that matter to us .

For example, the risk of it raining in the city of Washington will not matter to someone living in the city of New York. To a person living in Washington however, rain may represent a risk of great concern.

In business, risk refers to uncertainties that could impact objectives, as defined by the ISO standard 31000 .

Risk connects uncertainty with objectives – ISO 31000 , ISO

Risk has two dimensions, uncertainty and effect. The uncertainty is measured as probability , and the effect is measured as impact .

When we think about risk and impact, there are two types of impacts that matter: bad  and good

Both positive and negative impacts need to be appropriately managed. Another definition by PMI includes this detail:

An uncertain event or condition that, if it occurs, has a positive or negative effect on an objective – How risky is your project – And what are you doing about it? PMI

We can conclude that risk is this double-sided concept. Turning our attention to business, and how risk is relevant for you, we need to be able to manage risk in our business operations. We need to be able to chase the positives whilst looking out for the negative uncertainties. This is where risk management , as a practice, comes in.

What is risk management?

Risk management appropriately optimizes success with minimal threat and maximal opportunity. If you would like to know more about risk management, see our article The Ultimate Risk Management Guide: Everything You Need to Know .

My personal relationship with risk is tested regularly. As an avid rock climber, I constantly have to weigh up the risks of a particular move or climb.  It is a mental battle, which admittedly sometimes makes me question my life choices.

At the bottom of each climb, I look up, imagine the moves and question to myself:

• ‘What are the risks?’
• ‘Are there any risks I can avoid?’
• ‘Are there any risks I can transfer?’
• ‘Are there any risks I can mitigate?’
• ‘How much risk am I willing to accept?’

The above question ‘Are there any risks I can mitigate?’ is specifically concerned with risk reduction. Reduction of risk is one of the four risk management principles :

• Risk acceptance
• Risk avoidance
• Risk transference
• Risk mitigation

The aforementioned article explains the above key principles in detail along with other facets of risk management.

However, risk mitigation is where we get into the nitty-gritty of this article.

We understand the concept of risk, and how risk mitigation fits into the broader discipline of risk management. It is now time to take our magnifying glass and focus on risk mitigation specifically.

What is risk mitigation?

Risk mitigation means to reduce the extent of risk exposure, and the adverse effects of risk. The question is, when do we apply risk mitigation as a risk management strategy?

To understand when to apply risk mitigation, we must put down our magnifying glass for one moment and consider the process of applying risk management. There is a specific risk management procedure outlined to deal with risk. These steps are as follows as detailed by BC Campus in Chapter 6 Project Management .

Risk mitigation plan: Step one, risk identification

The risk needs to be identified. Analysis and deliberation are needed to uncover, recognize and describe the risks that might affect your project or its outcomes.

Checklists have a large use value here. They can be helpful to the project manager and the project team in identifying specific risks on the checklist, while also expanding the thinking of the team. You can use Process Street to create checklists to help you with your risk management processes. Scroll down to find out more about Process Street and how you can implement our superpowered checklists in your business today.

A good framework to consider when identifying risk in your projects is the risk breakdown structure (RBS) . Risk is organized into categories as per task , as shown below.

Using this risk breakdown structure, you can obtain a clearer understanding of where the risks are most concentrated. The teams can identify known risks. However, as a caution, any unknown risk cannot be identified via this approach.

Risk mitigation plan: Step two, risk evaluation

The next stage is to evaluate the risk. Referring back to the beginning of this article when we discussed how to identify risk, the risk was stated to be made up of two dimensions: probability and impact.

Measuring risks via these two dimensions details the inequality of risk. Some risks are more likely to occur than others, and some risks have a greater impact on a project or a given business operation .

By measuring risk based on these two dimensions, you can sieve out and identify critical risks that require treatment.

It is after risk evaluation where risk mitigation comes in. By evaluating each risk in terms of probability and impact, the correct risk treatment can be applied. By risk treatment I mean the application of one of the four risk management principles: avoid, accept, transfer and mitigate.

Risk mitigation plan: Step three, risk treatment

Each risk treatment strategy can be described in terms of cost and return . It is by considering the cost and return of each, in combination with risk evaluation (whether the risk is of high probability or low in addition to its impact), that the correct strategy can be applied.

• Risk acceptance : low cost, low return
• Risk avoidance : high cost, high return
• Risk transfer : medium cost, high return
• Risk mitigation : medium cost, high return

If a risk has a low likelihood and low impact, you may choose to accept the risk. The low return given from risk acceptance is not an issue, as it is a low impact risk that is unlikely to occur. The low cost of risk acceptance will mean that you are able to manage the risk without a significant reduction to your budget .

If the risk has a high impact and a high likelihood, you would want to remove this risk at all costs. The correct strategy would be risk avoidance.

The strategy to be applied is not so clear cut when we consider risks with either low impact and high likelihood, and high impact and low likelihood. The strategy to be applied will be dependent on the circumstance – it is not so black-and-white obvious which risk management strategy is the best.

Taking our specific focus on risk mitigation, we will consider when to apply this.

A risk mitigation strategy has a medium cost and a high return. This strategy can be appropriate under the following scenarios:

• High impact, high probability risk: With its high return, risk mitigation could be a good strategy here if risk avoidance is unaffordable. The risk will not be completely be removed, but its impact and/or likelihood will be reduced. However, risk avoidance is the ideal strategy to be applied in this scenario.
• High impact, low probability risk: The high return and medium-cost would make a risk mitigation strategy ideal under these circumstances. The low probability of the risk, despite its high impact, may deter great expense to avoid the risk. Risk mitigation offers a halfway house-like approach, to manage risk with potentially damaging consequences without too much expense (as the risk is unlikely). Risk transfer is another strategy to be considered.
• Low impact, high probability risk:  Risk mitigation’s high return would offset the high probability of occurrence. Risk mitigation as a strategy would work depending on how low the impact of this risk is vs the cost of the risk mitigation strategy. Risk acceptance or risk transfer should also be considered as an appropriate strategy here.
• Low impact, low probability risk: The medium cost of risk mitigation may deter its application in this scenario. Risk acceptance would be the better option here, the risk is not critical.

Apply your risk mitigation strategy

Once you have assessed your risk and identified risk mitigation as the best strategy, the next stage would be the application of risk mitigation practices.

Risk mitigation application requires continuous cost-benefit analyses. One, to assess whether risk mitigation is the best strategy to be applied. Two, to determine the degree to which the risk is mitigated. To illustrate this point, I will use an example of risk mitigation in action for data protection.

Risk mitigation in data protection

As mentioned in our previous article How To Prevent Data Loss and Implement Data Recovery , in our modern-day society, data can be considered as our new oil . It is that prized.

Data is valuable for your business, and so data loss is a risk that must be managed.

It is possible to mitigate risk by implementing backups and using data recovery services, as explained below:

The risk : data loss , which can be costly in both time and money .

Strategy: As a strategy, risk mitigation can be applied through the type of data backup system used. Through the implementation of the different risk management strategies, we introduce a sliding scale in terms of the degree of protection applied. For example :

• Continuous backup: This is expensive, with zero downtime, and often exceeds the mitigation strategy for critical data. This is not a suitable option due to cost. Continuous backup is reflective of a risk-avoidance strategy.
• Daily: Moderate, up to 8 hours of potentially lost data, with 3-hour recovery time. This is often the best choice considering cost and time factors. Moderate data-backup is a risk mitigation strategy, ideal in this instance.
• Weekly: Moderate, with up to 5 days of lost data, 12 hours to restore. The cost is acceptable, however, the recovery time for this option is often too high. Therefore, this option is not as suitable as option 2. This is a risk mitigation option, with lower costs but a lower return compared to option 2.
• Monthly: Very low cost, but not suitable as data backup is not adequate. This strategy could be considered as risk acceptance. The level of backup applied is not adequate to remove the risk of data loss.

You can see that in the example of data protection , risk mitigation as a strategy can be applied at various levels. Through assessment, risk mitigation is proven as the best strategy for data protection . The next step was to determine the degree to which the risk should be mitigated. A risk mitigation strategy with a higher cost but higher return (option 2) is the best choice.

Sometimes this assessment between risk management strategies is not thorough enough, leading to the application of an incorrect strategy. This can be costly, as the risks to be managed expose themselves halting your business operations. I have used the palm oil industry, and the disastrous 2015 Indonesia fires to illustrate this below.

Risk mitigation in the palm oil industry

Palm oil is a major driver of deforestation and biodiversity loss. It takes as little as one hour to remove 300 football pitches of natural forest, scouring the land to make way for palm oil monocultures. Such a rapid rate of deforestation is known to not be sustainable .

The risks of such a scaled-up, fast-paced industry include major soil degradation , an increase in forest fires , and worker exploitation . All of which act as a ticking time bomb, ready to disrupt the economically prosperous trade.

Risk:  Forest fires, worker exploitation, and major soil degradation

Strategy: In this instance, risk acceptance seems to have been the strategy applied across much of the industry. However, this is not a viable long-term strategy. 2015 saw the brutal realization of this fact as 5,000km of profit -driven production went up in smoke. The World Bank estimates that these fires cost the Indonesia economy at least $16.1 billion .

Improved strategy: Risk mitigation would have been an alternative, better strategy. The Roundabout on Sustainable Palm Oil group detailed 8 principles to create a more sustainable industry. Although there is debate over how sustainable, sustainable palm oil is, it does offer a viable alternative to mitigate risk, until a feasible risk avoidance strategy has been found.

The high costs associated with risk avoidance, mean that, for now, this may be not a viable strategy. Palm oil alternatives are a gateway for potential risk avoidance, however, high initial investment costs are required for widescale implementation and further research .

So far we have identified what risk is and how risk can be managed within your business via risk management processes . We have determined how risk mitigation relates to risk management as a strategy to reduce risk exposure. We have gone through the process leading up to the application of risk mitigation and discussed what can happen when the incorrect risk management strategies are applied.

In this next section, I want to step back, taking a broader look at risk mitigation and risk management. During my research to write this article, I was halted by my own confusion regarding the two terms. That is, risk mitigation is often used as a replacement term for risk management.  Yet risk mitigation is a strategy within the broader discipline of risk management.

Referring to one of Process Street’s previous articles: The Ultimate Risk Management Guide: Everything You Need to Know , I have come to the same conclusion as Oliver Peterson . That is, risk management is in a way, the same thing as risk mitigation. Risk management, and its underlying strategies , all act to reduce risk to a point of removing it. So risk management, like risk mitigation, works to reduce risk .

I have kept this in mind for the next section, of how you can use Process Street to implement risk management strategies in your business. As risk mitigation and risk management, both work with the same agenda, our resources designed for your risk management processes can jointly be applied for your risk mitigation strategy.

Use Process Street to implement risk management practices today

As a top business process management tool, you can use Process Street to promote and support your risk management processes. Whether this is mitigating against risk or transferring risk, using Process Street will ultimately reduce your business risk. We have prepared the video below to give you a comprehensive introduction of how to use Process Street for risk management.

Ready to get started?

We have an array of template resources to help you with your risk management strategy, as detailed in our  The Ultimate Risk Management Guide: Everything You Need to Know post. For example, check out our Risk Management Process, a checklist we have designed so that you can complete your own risk management processes based on the principles of continuous improvement.

Click here to access our Risk Management Process

As you can see from the above, our templates offer a step-by-step guide for any given business operation. In this instance, we are talking about risk management, and so I have pulled out a comprehensive list of our template resources to help you with your risk management processes.

• Risk Management Process
• SWOT Analysis Template
• FMEA Template: Failure Moden and Effects Analysis
• Standard Operating Procedure (SOP) Template Structure
• ISO 14001 EMS Structure Template
• ISO 14001 EMS Mini-Manual Procedures
• ISO 14001 Environmental Management Self Audit Checklist
• ISO 19011:2018 Checklist for Auditing Management Systems
• ISO 9001:2015 Audit Checklist for Quality Management Systems
• ISO 9000 Structure Template
• ISO 9000 Marketing Procedures
• ISO 14001:2004 to ISO 14001:2015 EMS transition checklist
• ISO 9001 and ISO 14001 integrated management system (IMS) checklist
• ISO 26000:2010 social responsibility performance assessment checklist
• ISO 45001:2018 occupational health and safety (OHS) audit checklist
• ISO 27001:2013 information security management system (ISO 27K ISMS) audit checklist
• ISO 9004:2018 for sustainable success in QMS self audit checklist
• Electrical Inspection Checklist
• Electrical inspection checklist for motors and vehicles
• Electrical inspection checklist for marinas, docks, and boatyards
• Electrical inspection checklist for electric vehicle charging equipment
• Electrical inspection checklist for agricultural buildings
• Electrical inspection checklist for hospitals and health care
• Electrical inspection checklist for residential rough inspection (general)
• Electrical inspection checklist for air-conditioning and refrigerating
• Hotel Sustainability Audit
• Monthly housekeeping inspection checklist
• Hotel safety inspection checklist
• Rental inspection checklist
• Pretrip inspection checklist
• FHA inspection checklist
• Fire inspection checklist
• Restaurant health inspection checklist
• Roof inspection report template
• Site inspection checklist
• Forklift inspection checklist
• Facility inspection checklist
• Home inspection checklist
• Vehicle inspection checklist
• Privileged password management

In each one of these templates, you will find the following features.

• Stop tasks to ensure task order
• Dynamic due dates , so no deadline is missed
• Conditional logic , creating a dynamic template that caters to your needs
• Role assignments , to ease task delegation within your team

These features work to produce superpowered checklists that enhance efficiency , productivity and prevent mistakes and failures . By using our templates, your risk management strategy will be optimized.

What are you waiting for?

You can jump right in and use any of our template resources for free.

Obtain a further understanding of risk management using Process Street resources

As mentioned before, risk management is a broad discipline. In this article, we have looked at risk management with a specific focus on risk mitigation. However, there are many facets, beyond the scope of this article, that are important for understanding risk management.

If you have found this article useful, and want to know more about risk management, check out the below resources:

• The Ultimate Risk Management Guide: Everything You Need to Know
• Basics of Enterprise Risk Management (ERM): How to Get Started
• What Is ISO 31000? Getting Started with Risk Management
• What is Quality Management? The Definitive QMS Guide (Free ISO 9001 Template)
• The Complete Guide to Business Process Management

How do you try to mitigate risk? Do you use any specific frameworks or tools? Let us know in the comments below – who knows, you may even get mentioned in one of our upcoming articles!

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Jane Courtnell

Hi there, I am a Junior Content Writer at Process Street. I graduated in Biology, specializing in Environmental Science at Imperial College London. During my degree, I developed an enthusiasm for writing to communicate environmental issues. I continued my studies at Imperial College's Business School, and with this, my writing progressed looking at sustainability in a business sense. When I am not writing I enjoy being in the mountains, running and rock climbing. Follow me at @JaneCourtnell.

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Managing Risks: A New Framework

• Robert S. Kaplan
• Anette Mikes

Risk management is too often treated as a compliance issue that can be solved by drawing up lots of rules and making sure that all employees follow them. Many such rules, of course, are sensible and do reduce some risks that could severely damage a company. But rules-based risk management will not diminish either the likelihood or the impact of a disaster such as Deepwater Horizon, just as it did not prevent the failure of many financial institutions during the 2007–2008 credit crisis.

In this article, Robert S. Kaplan and Anette Mikes present a categorization of risk that allows executives to understand the qualitative distinctions between the types of risks that organizations face. Preventable risks, arising from within the organization, are controllable and ought to be eliminated or avoided. Examples are the risks from employees’ and managers’ unauthorized, unethical, or inappropriate actions and the risks from breakdowns in routine operational processes. Strategy risks are those a company voluntarily assumes in order to generate superior returns from its strategy. External risks arise from events outside the company and are beyond its influence or control. Sources of these risks include natural and political disasters and major macroeconomic shifts. Risk events from any category can be fatal to a company’s strategy and even to its survival.

Companies should tailor their risk management processes to these different risk categories. A rules-based approach is effective for managing preventable risks, whereas strategy risks require a fundamentally different approach based on open and explicit risk discussions. To anticipate and mitigate the impact of major external risks, companies can call on tools such as war-gaming and scenario analysis.

Smart companies match their approach to the nature of the threats they face.

Editors’ note: Since this issue of HBR went to press, JP Morgan, whose risk management practices are highlighted in this article, revealed significant trading losses at one of its units. The authors provide their commentary on this turn of events in their contribution to HBR’s Insight Center on Managing Risky Behavior.

• Robert S. Kaplan is a senior fellow and the Marvin Bower Professor of Leadership Development emeritus at Harvard Business School. He coauthored the McKinsey Award–winning HBR article “ Accounting for Climate Change ” (November–December 2021).
• Anette Mikes is a fellow at Hertford College, Oxford University, and an associate professor at Oxford’s Saïd Business School.

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How To Create A Risk Management Plan + Template & Examples

Dramatically reduce your chances of project failure with a risk management plan: learn how to create one for your projects, get some examples, and download our template!

A clear and detailed risk management plan helps you assess the impact of project risks and understand the potential outcomes of your decisions. It can be a useful tool to support decision making in the face of uncertainty.

However, I have seen projects fail because stakeholders did not take the risk management plan seriously or because the project failed to implement a risk management strategy.

Read on to learn how you can avoid these mistakes for your projects.

What Is A Risk Management Plan?

A risk management plan, or RMP, is a document describing how your project team will monitor and respond to unexpected or uncertain events that could impact the project.

The risk management plan:

• analyzes the potential risks that exist in your organization or project
• identifies how you will respond to those risks if they arise
• assigns a responsible person to monitor each risk and take action, if needed.

Team members and stakeholders should collaborate to create a risk management plan after starting to develop a project management plan but before the project begins.

What’s Covered In A Risk Management Plan?

The fidelity of your risk management plan will vary depending on the nature of your project and the standard operating procedures that your organization uses. 

A project risk management plan seeks to answer:

• What is this project, and why does it matter?
• Why is risk management important for the project’s success?
• What will the team do to identify, log, assess, and monitor risks throughout the project?
• What categories of risk will we manage?
• What methodology will be used for risk identification and to evaluate risk severity?
• What is expected of the people who own the risks?
• How much risk is too much risk?
• What are the risks, and what are we going to do about them?

Depending on the project, this document could be hundreds of pages—or it could be less than a dozen. So how do you decide how much detail to provide? Here are two illustrative examples (but by no means are they the only ways to do it!).

PS. If you’re looking for additional information, we also did a workshop on managing risk that’s available for DPM members .

2 Types Of Risk Management Plans

In this section, we’ll cover 2 common types of risk management plans—a RAID log and a risk matrix.

#1: Simpler Version—Lightweight RAID Log

In its most minimal form, a risk management plan could be a handful of pages describing:

• how and when to assess risk
• the roles and responsibilities for risk owners
• at what point the project risk should trigger an escalation.

Instead of a formal risk register designed to calculate risk severity, a lightweight risk management approach may simply involve maintaining a risk list in your weekly status report .

This list (also known as a RAID log) tracks risks, assumptions, issues, and dependencies so that the project team and sponsor can review and further discuss.

When to use it : this approach could be useful for a small non-technical project being executed by a team of 3-4 people in an organization that does not have a standard approach to risk management.

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#2: Complex Version—Risk Matrix

When an organization already has a culture of risk management, there may be a template to follow that demands a high level of detail. These details may include a full description of the methodology that the organization will follow to perform qualitative and quantitative risk analysis, along with an impact matrix. 

An impact matrix, or risk assessment matrix, shows the relationship between risk factors in calculating risk severity. Risks that are high-probability and high-impact are the most severe.

An organization may design its risk register template to prioritize and assign a numerical severity score to measure the level of risk. 

Additionally, you may need to create a risk breakdown structure to decompose higher-level risk categories into smaller, more specific risk subcategories

When to use it : making a detailed risk management plan isn’t about creating complexity for complexity’s sake—you and your team will be glad to have this level of detail on a large enterprise project that involves larger teams, multiple stakeholders, and high stakes that could have a significant impact on the business.

In terms of tooling, there are some great options available for managing risk on your project. Many organizations favor spreadsheets as part of an enterprise business software bundle, but there are also some providers that support risk management planning specifically. 

Two examples of risk management software are Wrike and monday.com. These tools integrate the entire risk management process with the wider project management plan.

The most important consideration is not the tool used, but rather the discussions you’ll have with your team and your project sponsor about how to navigate risks to increase the likelihood of project success.

How To Make A Risk Management Plan 

Below is a step-by-step guide to developing your own version of a risk management plan. Keep in mind that the nature of these steps may vary depending on the type of project involved, so don’t be afraid to tailor these steps to meet project and organizational needs.

The first 2 steps in the process are preparing supporting documentation and setting the context.

Next, decide how you want to identify & assess risks, and continuously identify those risks.

The next steps in the risk management process include assigning risk owners, populating your risk register, and then publishing it.

Make sure to monitor and assess risks throughout the project, and once the project is over, archive the risk management plan in a way that it can be reused for future projects.

1. Prepare supporting documentation

You’ll want to review existing project management documentation to help you craft your risk management plan. This documentation includes:

• Project Charter: among other things, this document establishes the project objectives , the project sponsor, and you as the project manager. Frankly, it gives you the right to create a project management plan and then a risk management plan within that. If formal project charters aren’t used at your organization, you should at least have this documented in an email or a less formal brief.
• Project Management Plan: not to be confused with the project plan , this document outlines how you’ll manage, monitor, and control your project, including what methodology to use, how to report progress, how to escalate issues, etc. Your risk management plan should act as a subcomponent of the project management plan.
• Stakeholder Register: it’s good to have a solid idea of who the project stakeholders are before assessing risk. Each of these stakeholder groups presents a different set of risks when it comes to people, processes, and technology. You can also invite stakeholders to identify risks throughout the project and even nominate them as risk owners!

2. Set the context

Once you have your supporting documentation available, use it to frame up the discussion around your risk management plan. Specifically, take the project description and objectives from the project charter and use them to outline the business value of the project and the negative impacts that would result should the project fail .

The introduction to your risk management plan should explain the intent of this document and its relationship to the overarching project management plan. Use this context to drive a conversation about risk management with your team and your project sponsor.

3. Decide with your team how to identify and assess risks

Different methodologies are appropriate for different types of projects. The methods you choose also need to be sustainable for the team to perform throughout the project.

The key here is to have the right discussions and gather input to build consensus with your team and your stakeholders early in the project life cycle. Use these discussions to agree on risk categories, risk response plans, and ways to calculate risk severity.

4. Continuously identify risks

Once you’ve decided on the methodology to use, now the real fun begins—thinking about the things that could go astray during your project!

A great way to do this is to hold a risk workshop—a group session involving your team, key stakeholders, project sponsor, and subject matter experts to identify, evaluate, and plan responses to risks.

In the example below, I have used a simple overview from a sample project. During the workshop, you’d discuss everything in columns E-R and make sure that you have clear, SMART outcomes to put in each of the boxes. (SMART stands for specific, measurable, action-oriented, realistic, and timebound.)

I like to keep a copy of the risk register on my desk during the workshop to make sure that each column is discussed and populated appropriately. After the workshop, add any supporting details to finalize the document.

The project manager’s role during a risk workshop is to facilitate the meeting effectively. This involves brainstorming with stakeholders to evaluate both known risks and possible risks that may not have been considered. It could look something like this:

At the end of the workshop, your goal is to come away with stakeholder alignment on project risks, the desired risk response, and the expected impact of the risks. Stakeholder buy-in is critical for a successful risk response, so time in the workshop is likely to be time well-spent.

5. Assign risk owners

As you identify risks, you should work with the team to assign owners (including yourself). Project managers are responsible for risk management too!

That being said, the project manager can’t own everything. Assigning risk owners can be the most difficult area of risk management to finalize because it requires stakeholder accountability.

Make sure that risk owners have reviewed the risk management plan and are clear on their responsibilities. Follow up with them as you monitor risk throughout the project life cycle.

6. Populate the risk register

Following the risk workshop, finish populating any information required for the risk register . This includes a description of the risk, the risk response category, detailed risk response, risk status, and risk owner.

What’s important to remember during this exercise is ensuring that the risk response reflects the severity and importance of the risk. You can then review the broader risk register to understand any wider correlations that might exist among risks.

7. Publish the risk register

Send around the updated risk register within 48 hours of the workshop to give everyone time to read and process the output.

You can also use the risk register within wider project discussions to explain or define the timeline for a project or specific actions that need to be completed. It’s important to be timely so that the output can be used in other project artifacts.

8. Monitor and assess risks continuously throughout the project

New risks are introduced to a project constantly. In fact, mitigating one risk might create another risk or leave “residual risk.”

If feasible within your project constraints, try to run risk workshops periodically throughout the duration of the project or incorporate risk register reviews into other recurring planning activities. 

Nothing feels quite as deflating as when you swerve to avoid one risk only to drive blindly into another, much bigger risk.

9. Archive your risk management plan in a reusable & accessible format

After your project, it’s a good idea to archive your risk management plan for future reference.

There are many reasons why (in fact, it may be mandatory in your organization), but here’s the main one: while not every risk management plan suits every project, the risk and response strategies may remain applicable. Use past risks to create a foundation for your next project.

Examples Of Risk Management Plans In Action

Admittedly, the word “risk” is itself a bit broad. Not having enough resources to hit the project deadline is a risk. Hurricane season is a risk. Disruption of the space-time continuum is a risk. 

So, where do you draw the line on what types of risks to consider—which risks have a large enough potential impact to require attention, or even a contingency plan?

Here’s one way to think about it:

If the item is related to people, processes, resources, or technology and has any likelihood of threatening project success, you should log it as a risk.

Now, you might not need to do a comprehensive analysis on every risk in your risk register, but you do need to revisit the risks identified and conduct risk monitoring throughout the project. If someone starts testing a time machine near your office, for example, your highly unlikely space-time continuum risk has escalated.

Does this matter?

Yes. To prove it, here’s a simple example of risk management that saved a project:

A colleague was working on a service design project that required in-person research (this was before COVID-19), and on her RACI chart , she had clearly communicated to the client that it was the client’s responsibility to book a meeting space to conduct this research. She had logged a risk with her team that the client might not be able to secure a space.

Two days before the research commenced, the client informed her they weren’t able to secure the space. Luckily, her risk mitigation strategy on this particular risk was to book a backup space at the office, which she had done weeks ago. 

Something that could have stalled the project for weeks had become nothing more than an email that said something like “All good, we’ll use our space."

Here’s another example:

An agency agreed to an aggressive timeline for a highly technical project. The team had raised concerns as the project was being initiated, but leadership still wanted to proceed. The project manager and technical architect logged the timeline risk before the project started, and their risk response strategy was to re-evaluate the project timeline using a Monte Carlo simulation. 

After calculating a pessimistic, optimistic, and likely duration for every project activity on the critical path, they determined mathematically that the project had a 3% chance of hitting the deadline.

The project manager raised this with the client, and the client agreed to re-scope the project and re-baseline the project before getting going. It was too big of a risk for them to take.

More Articles

Time tracking: your secret risk management superpower, increase project success with a risk register + easy template, raid logs: definition, template, examples, & how to guide, risk register template.

There are a lot of risk register templates available online, and I would recommend looking at one that fits your needs, rather than one that includes every possible scenario. 

In the risk management plan template available in DPM Membership, we’ve tried to keep the risk register as simple as possible to ensure that you’re able to enter the relevant information for your project.

Best Practices For Risk Management Plans

Consider these best practices to help you craft an effective risk management plan:

• Develop the risk management plan during the project planning phase, after you’ve developed the project charter and the project management plan, to give stakeholders the necessary context
• Adapt the format and level of detail of the risk management plan to align with the needs of the project, industry, and organization that you support
• Assign a risk owner to every risk identified in your risk register, and hold them accountable for the risk response
• Continuously identify risks throughout the project life cycle and update the risk register accordingly
• During project closing , archive your risk management plan and use it to inform risk planning on future projects.

What Do You Think?

Whether you’re a novice project manager or a seasoned pro, having a good risk management plan is vital to project success. And, the key to a successful risk management plan is adaptability.

You need to make sure that, with every project you run, you can adapt the risk management plan to your project, industry, and organization.

If you’ve got a great story about a risk you mitigated successfully on your project or a different way to manage risk, please share it in the comments below!

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Risk Mitigation

Discover all there is to risk mitigation, how it fits into risk management, and how to apply it in an organization.

What is Risk Mitigation?

Risk mitigation is the strategy that organizations use to lessen the effects of business risks. It’s similar to the risk reduction process, wherein potential business threats are identified before the organization takes the necessary steps to lessen the effects of these factors.

Some of the threats and risks that modern organizations, businesses, and enterprises deal with include cybersecurity threats, natural disasters, and anything that may cause damage to the equipment, personnel, and facilities of an organization.

Why Is Risk Mitigation Important?

Risk mitigation is the process of understanding certain risks and threats, accepting that they exist, and taking the appropriate measures to reduce their effects in case they happen. It is a part of the risk management process and is necessary to prepare an organization for any threats to its operations and processes.

Instead of eliminating threats, risk mitigation focuses on the unavoidable threats and reducing their impact. This can include natural disasters and other threats that may cause issues in production and other processes.

These are threats that cannot be eliminated and are completely out of the company’s control. Risk mitigation is there so that if these events occur, the company has the right measures to ensure that the damage the organization sustains is kept to the bare minimum.

Types of Risk Mitigation

Risk mitigation isn’t a one-size-fits-all model. Each organization has its own take on it and its own approach to reducing the effects of certain unavoidable threats. However, some of the common techniques used for risk mitigation include:

Risk Transfer

This involves transferring the risk allocation between different parties. For example, if an organization gets materials or products from a third party supplier before distributing them, they can put all the risk for those certain materials in the hands of the third party instead.

Risk Acceptance

This involves accepting a certain risk and the threats it has for an organization for a certain period of time. The organization can focus on mitigating other risks and threats during this time.

Risk Avoidance

This is the strategy that an organization uses when the consequences of certain risks are too high for them to mitigate the risk. In these cases, it might be best for an organization to take measures to eliminate and avoid the risk altogether. 

For example, if a certain process is deemed risky for safety and other reasons, risk avoidance would be not utilizing the process for worker safety.

Risk Monitoring

This involves keeping a close eye on different processes and teams to assess risks as they happen. From there, measures can be taken to minimize the effect of these risks.

Risk mitigation is pre-emptive. A great example of this is when an organization practices regular and proper maintenance of its equipment. This way, there’s a smaller chance that their equipment breaks down. If the equipment breaks down for unavoidable reasons, regular maintenance can ensure that the damage isn’t too bad. It also makes sure that the repairs won’t be as costly compared to if the organization didn’t practice regular maintenance.

A Step-by-Step Guide to Risk Mitigation

The risk mitigation process can be fairly complex. Companies regularly face a wide range of different risks in their day-to-day activities. This is why a risk mitigation team is necessary for modern companies looking to comprehensively reduce the effects of certain risks.

While each company has its method and approach to risk mitigation, most strategies follow similar processes. Here are some key steps organizations and teams use to mitigate risk.

Identifying the Risks

The first step in mitigating risks is understanding which risks are present in the first place. When identifying risks, it’s important to leave no stone unturned. So, aside from data risks and breaches, organizations need to consider natural disaster risks, mechanical risks, and everything involved with their process.

Additionally, all risk mitigation strategies must include the employee’s needs and safety. Before formulating a strategy for risk mitigation, risk identification is the first step organizations need to take.

Create Your Own Risk Mitigation Plan Checklist

Eliminate manual tasks and streamline your operations.

Assessing Risks

Once the risks are laid out, it’s time for the team to assess the risk. During this phase, it’s important to quantify the risks and identify the risk levels of certain threats. This process also involves checking the measures and controls in place to reduce the effects of certain threats.

Prioritizing Certain Risks

Once the risks are properly leveled and quantified, the team can then figure out which risks to prioritize. Prioritizing certain risks is a key part of risk mitigation, as companies have to strongly emphasize the risks that can have the most detrimental effect on the organization, its processes, and its employees.

When the risk levels are properly assessed, the organization can easily determine which risks to prioritize and what measures are required to mitigate the risks.

Monitoring Risks

Risks and risk levels can change depending on several factors. This is why monitoring and tracking the risks throughout the organization is important. That way, the team can determine when the severity of the risks increases and when measures need to be changed. Additionally, it also helps them stay compliant with different regulations in place to reduce risk .

Implementation & Adjustments

Once there is a proper plan for risk mitigation, the next step is to implement the plan throughout the organization. This involves placing all appropriate measures, briefing and training employees, and most importantly, making adjustments to the strategy as needed.

There’s a chance that there are some required changes after seeing the risk mitigation plan . It’s important to adjust when the team learns something new to ensure the safety of all employees and processes and the organization’s compliance with regulations.

How to Mitigate Risks Effectively with SafetyCulture

Why safetyculture.

Risk mitigation is a complex process that can be hard to implement. Every part of the process, from the risk assessment to implementation, can be challenging for an organization. To make the entire process easier for the organization, tools such as SafetyCulture (formerly iAuditor) can be a huge help.

SafetyCulture is a comprehensive workplace tool packed with features to boost productivity, efficiency, and safety. However, the app also has a range of features available that can help organizations with their risk mitigation strategy. These features include:

• Create risk mitigation checklists from a range of templates available on SafetyCulture
• Establish a robust reporting system to allow employees to report issues as they happen and help teams identify risks in the workplace
• Collect crucial insights and data on risk mitigation measures to assess their effectiveness
• Generate reports from inspections to ensure that all processes are running smoothly
• Automate the monitoring of equipment to identify and catch issues the second they occur
• Facilitate workplace communication so that employees and managers have a clear line of communication to express any concerns, issues, and newly identified risks.

FAQs about Risk Mitigation

What is the difference between risk mitigation & risk management.

Risk mitigation is a part of the larger risk management process. While risk management deals with organizational risks, mitigation focuses on the effects of unavoidable risks and how to minimize them.

What Is the Most Common Form of Risk Mitigation?

Generally, organizations use a combination of all four types of risk mitigation to create a customized plan for their needs. This is why it’s crucial to have a dedicated and skilled team to analyze the organization and create a risk mitigation plan.

How Do You Identify Risks?

Identifying risks can be tough; however, it’s important to leave no stone unturned when doing so. This means that teams need to consider the risks involving equipment, natural disasters, safety risks, and anything else a company may face while conducting operations.

What Are the Four Types of Risk Mitigation?

Risk transfer, acceptance, avoidance, and monitoring are the four most common types of risk mitigation. Most organizations combine all types of risk mitigation to create a comprehensive and customized plan for their needs.

Leon Altomonte

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10 Must-have Risk Mitigation Strategies for Your Business

November 28, 2023

Risk is inevitable in business. From sea-faring merchants of yore protecting their goods from pirates to modern companies fighting cybercriminals, risk mitigation strategies are fundamental to any business. 

The opportunity costs of not having a risk mitigation strategy can be extremely high. KMPG estimates that large companies lose 1.5% of their profits due to poor risk management strategies. 

Organizations must have a thoughtful and future-proof risk mitigation strategy to prevent loss of profits, reputation, and compliance. In this blog post, we discuss why and how.

What is Risk? 

What is risk mitigation, why is risk mitigation important, what is a risk mitigation plan, 10 risk mitigation strategies for your business.

Risk is the uncertainty or unpredictability associated with running a business, which can result in a loss of some kind. The loss itself need not be monetary alone. It can come in various forms, such as:

Financial risk : Organizations face financial risk when they are liable to lose money if it materializes. This could be loss of potential sales, fines/penalties from authorities, losing business to competition, etc.

Legal or compliance risks : The risks arising from non-compliance with regulatory standards can be very high. Such risks throw businesses open to lawsuits or regularity fines.

Operational risks : When something that should run smoothly doesn’t, it creates operational risk. This could be a critical machinery facing failure or the cloud environment going down. It could also disrupt collaboration in the workplace , hindering effective project delivery.

Security risks : The security of the people, space, assets, and products of an organization is critical. Threats can come from a natural disaster, an unexpected attacker, or a hacker.

Reputational risks : When a company’s reputation can be affected by someone’s actions, it creates a risk. For example, an (inadvertently) racist ad campaign or an employee’s uncouth behavior can impact a company’s reputation.

Risk mitigation is a strategic process to identify, control, and eliminate potential threats that could adversely affect an organization. It is an integral part of a business strategy to strengthen its resilience and responsiveness. Here’s what a good risk mitigation process should look like.

Be a detective and sniff out potential risks, be it financial, operational, or logistical. To do this, set up systems. For example, operational risks around technology can be identified through continuous monitoring and regular vulnerability assessment and penetration testing (VAPT). 

Once you’ve identified your threats, perform a thorough risk assessment and prioritize for response. You can do this by answering two important questions:

• Likelihood: How likely is this risk to materialize? 
• Impact: How much will this risk impact the business if it does occur? 

Rate every identified risk based on severity and design the action plan. Choose from ClickUp’s risk assessment templates to get started. Or start your own.

For example, a vulnerability in your customer database (which carries financial, reputational, and compliance risks) would be a significantly higher priority than a typographical error in a social media post (which carries reputational risk). Prioritize them accordingly and set timelines.

Based on the priorities, deal with the risks, and take them head-on. Create a risk mitigation plan (which we discuss in detail later in this blog post). 

Risks don’t go away once you identify and mitigate them. Businesses face new risks from all directions every day. So, continuously monitor your risks and the effectiveness of your risk mitigation plan. Review the process once every 3-6 months with all stakeholders.

You might think, “But I am not a hotshot business with huge resources. Is all this really necessary?” Well, yes!

Irrespective of a business’s size, location, products, or revenue, a good risk mitigation strategy protects the organization and safeguards its interests. 

A well-executed strategy can mitigate risk by

• Enabling proactive identification, assessment, and management of risks
• Predicting future risks and facilitating preventative measures
• Preventing avoidable financial losses
• Avoiding scrambling of resources and responses when the threat materializes
• Saving the additional cost of risk management and corrective measures
• Making space for experimentation and innovation
• Increasing business resilience and shareholder value

To mitigate risk effectively, you need a plan. Let’s see how you can build that.

A risk mitigation plan is a comprehensive framework that helps you deal with all kinds of potential risks. It is like a trusty umbrella on a rainy day, allowing you to dance in the rain while staying dry!

It typically comprises the following.

An overall approach to risk management : What do you define as a risk? Will you be preventative or reactive? Will your responses be offensive or defensive? How will you absorb the impact of your risks?

Identified risks : Make a list of risks you expect to encounter. Make this specific and practical. Instead of listing ‘change in regulation,’ define this as ‘the Digital Operational Resilience Act is expected to come into effect in 2024.’

Risk mitigation strategy : Clearly outline how you would address every potential risk. A visual risk mitigation workflow can help bring the entire team on board the process. It will also help them remember the steps or easily access the workflow should they need it.

Include what you would do to prevent the risk from occurring and how you would respond if it materializes.

Actionable measures : Define specific actions to implement the risk mitigation strategy. 

• Assign responsibilities to team members
• Set aside budgets to mitigate identified risks
• Define timelines for each action item

Monitoring and review : Formulate a regular review process (once a quarter at least) to assess if your risk mitigation plan works. Measure effectiveness based on pre-determined metrics, such as cost savings, customer satisfaction, etc.

Now that you’ve understood the concept let’s explore practical ways to create your risk mitigation strategy. 

1. Accepting inevitable risks

Not all risks need to be eliminated or even mitigated. Sometimes, the likelihood of a risk occurring might be too low. Or the cost of mitigating the risk might be higher than its impact. In such cases, you acknowledge its existence and let it be, a strategy called risk acceptance.

The simplest example is the risk of a particular team member leaving the organization. In most cases, this is inevitable, so the risk is accepted. When it happens, the role shall be backfilled.

2. Transferring risks to a third party

As the name suggests, this strategy shifts the risk from you to another entity. The classic example is purchasing theft or fire insurance for your business. In project management, this might be having resources on the bench or keeping contractors on the rolls.

Organizations follow risk transference as a strategy when the impact of its materialization is high. While you implement this strategy, be mindful that the costs can be high, too. For instance, insurance is a regular payout, whether or not the risk materializes.

3. Avoiding risky situations altogether

At the other end of risk management strategies is risk avoidance. Here, you will steer clear of projects/activities that involve said risk. This strategy is employed in situations where the impact of the risk is exceptionally high. 

Clear examples would be abstaining from hiring a candidate with a criminal record or setting up an office in a country going through political turmoil. In each case, the cost of failure is too high even to take the risk.

4. Sharing risk based on organizational tolerance

Here, you distribute the risk across multiple parties. For example, a venture capital firm invests a part of the investment sought by a startup instead of the whole sum. They decide how much to invest based on their risk tolerance, i.e., the investment they can lose comfortably.

When each investor decides their investment this way, the risk is shared among them, breaking the fall should it occur.

5. Managing risks strategically

Risk management, also known as risk buffering, is when you have a backup of everything you need (people, time, goods) for times of crisis. If that brings to mind a doomsday prepper, it need not be that radical.

Businesses regularly maintain disaster recovery systems or backups for data in case something goes down. Maintaining a healthy cash flow that covers salaries for the next few months is also a perfect example. 

Purpose-designed risk management software can help devise the right action plan for every kind of risk a business might encounter.

6. Diversifying for protection from risks

Going by the adage, don’t put all your eggs in one basket; diversification distributes your risk or dependence across multiple options, reducing risk exposure and consequences. It is a very commonly used risk mitigation strategy.

Organizations regularly engage multiple contractors for similar jobs to diversify the risk of any of them shutting down. Venture capitalists diversify their investments across various startups. Consultants and freelancers work with multiple customers if one downsizes or terminates the contract.

7. Adopting an agile approach

The practice of Agile, in itself, is an effective risk mitigation strategy. The traditional way was spending years and millions of dollars to build a product before taking it to the market, which poses a considerable risk of failure.

On the other hand, Agile teams launch a minimum viable product (MVP) and build incrementally, taking into account market response regularly. This increases the chances of success as it is built on the feedback of customers and the performance of the product. Other technology teams release beta versions for developers and later the public before a full-on launch. 

8. Using a task management software

This risk management strategy relies on tools and processes to eliminate operational risks. Good task management software can help organize all the work in a hierarchical, interconnected, and contextual way, improving operational efficiency within the team.

ClickUp’s task management software is designed to achieve precisely this. With ClickUp, you can:

• Organize tasks and sub-tasks into projects, helping you manage multiple projects effectively
• Prioritize work based on factors relevant to the business
• Assign users to each task, ensuring accountability
• Add priorities, tags, and dependencies to tasks
• Provide complete visibility to every stakeholder
• Track time for each task to ensure productivity and profitability

A project management tool like ClickUp provides clarity to all parties involved. It eliminates the risk of misunderstandings, missed timelines, or incurring additional costs. It brings together all resources, eliminating the need for endless meetings and the risks of unproductive time. 🙌

9. Monitoring project progress

You run strategic, operational, and financial risks if the project doesn’t progress as intended. A robust risk monitoring mechanism can mitigate that.

Regular monitoring can help:

• Track if the project is on time
• Set clear project objectives
• Identify gaps or issues in case of delay
• Make amends like assigning additional resources or pushing deadlines
• Collaborate with team members about their performance and the adjustments needed

ClickUp’s Project Monitoring and Control Plan template helps managers ensure that projects are completed on time, within budget, and with the expected quality. 

ClickUp can protect you from a lot more operational risks. The ClickUp Dashboard offers real-time project tracking. The workload view lets you understand who is doing what and assign tasks appropriately. The Gantt chart view visualizes the timeline to help on-time delivery. 

You can manage goals and budgets all in one place. You can also use it as a collaboration app to facilitate meaningful, timely, contextual communication among team members.

10. Set attainable goals

Mitigating the risk of failure begins with setting yourself up for success. Setting attainable goals is fundamental to that. Bring your team together and set goals that everyone thinks are achievable. Make them visible to everyone on the team—you can use several goal-tracking apps for this purpose.

Include buffer time and effort to prevent last-minute rush. Review your goals occasionally and adjust them if they become unattainable. 

Don’t know where to start? We’ve got you covered with Clickup’s goals dashboard ! You can set goals that are numerical, monetary, true/false, and task completion. You can also set targets for each sprint or time. You can foster a collaborative work environment with every team member driving towards the same goals.

Mitigate Various Kinds of Operational Risks with ClickUp

In every organization, operational risks are unavoidable. Team members will resign. Tasks will get delayed. Time estimates will be wrong. People may miss a critical point in a user story. Complex dependencies will require extra effort. 

These risks can’t be avoided but can be mitigated and managed with good project management software. 

ClickUp’s project management features are designed to address all this and more. It helps project management teams build operational efficiency to save time by making people more productive. See how you can mitigate risks with ClickUp. Sign up for free today !

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• How risk mitigation can protect your co ...

How risk mitigation can protect your company during changing times

All businesses face risk, especially in uncertain times. Risk mitigation can help protect your company by reducing the likelihood that risks will occur—and their impact if they do. Here, we walk you through four common risk mitigation strategies you can use to shield your company and your team from potential risk. 

Think about the last time you went for a walk. You likely checked the weather first, right? And, based on what the weather app showed you, decided how to dress and what to bring. If it looked cold, you probably put on a jacket or a light sweater. If the app forecasted rain, you might have weighed the odds of a downpour and decided whether or not to bring an umbrella. 

That’s risk mitigation. You determined potential risks (like being cold or getting wet), weighed the likelihood that they would happen, and took steps to reduce your risk. 

Risk mitigation is more than a strategy for keeping yourself dry on rainy days. In business, it can help you avoid the negative consequences of larger unexpected risks, like financial losses. Let’s take a look at four strategies you can use to mitigate risk for your company and your team. 

What is risk mitigation? 

The goal of risk mitigation is to reduce the likelihood of business or project risk , as well as to put strategies in place to monitor and respond to potential threats in the event they happen. Risk mitigation is an important part of any business strategy, and it’s especially important when the business faces outside risks that your team has less control of, like changing macroeconomic conditions. 

A leader's guide to change management

Learn how to be the leader your team needs during times of change. Get tips on when to set new business objectives, how to communicate transparently, and how to keep employees engaged.

Why is risk mitigation important for businesses?

No matter how well you plan, all businesses face inherent risks. This is even more true during uncertain times, like times of global crises or evolving market conditions. Risk mitigation can help you—and your team—navigate uncertain waters by reducing unnecessary risks to business continuity. 

Common risks businesses face include:

Project risks like scope creep , lack of project clarity, tight deadlines, and stretched resources. 

Financial risks such as lack of funding or decline in profitability. 

Economic risks like changing macroeconomic conditions and stock market fluctuations. 

Cybersecurity risks like data leaks and hackers. 

Reputation risks like brand management issues or loss of customer trust.

Human risks such as turnover, talent shortages, and hiring freezes .

Operational risks like supply chain risk or changes to operating procedures. 

Just like being unprepared for risks in life can have negative consequences—like getting rained on if you leave the house without an umbrella—businesses unprepared for risks can face obstacles, including:

Projects going over budget

Underperforming project outcomes

Stretched resources causing burnout and overwork

Team turnover 

Missed deadlines

Impact on business reputation or brand

Slowed innovation

Financial losses 

These risks—and potential outcomes—can sound overwhelming. But just because risk is part of doing business doesn’t mean you can’t prepare for it. Risk mitigation strategies can help you reduce business risk and focus on getting things done. 

Four common risk mitigation strategies 

There are four common types of risk mitigation strategies you can use to protect your business against unwanted risks. The first step in risk mitigation is identifying and assessing the risks your business or project faces. Once you have a better idea of what possible risks you’re dealing with, you can move forward with a risk mitigation plan that will best protect you and your team. 

To identify potential risks:

Start early. You should assess project risks during project initiation and project planning . You should continually assess business risk, especially during times of uncertainty or changing economic conditions. 

Meet with your team. One of the best ways to identify risks is to meet with the team that’s involved with the project or business impacted by the potential threats. This could mean meeting with your project team, business leaders, and/or stakeholders . Things you may want to consider when gauging project risk include the project timeline , scope, budget, available resources, and additional project constraints . When assessing general business risks, look at factors like market share, competitor performance and strategy, potential legal risks, and current or projected economic conditions (a PEST analysis can help here). 

Determine the likelihood of potential risks occurring. Once you have a better idea of the risks facing your business, you can create a risk matrix template . A risk matrix template outlines the overall impact of a risk by looking at the likelihood that the risk might happen—and the severity of the consequences if the risk does occur. That way, you know which risks have the potential to really hurt your business and which might be, well, worth the risk.

Develop a risk mitigation strategy. Now that you know what risks are facing your business and their potential impact, you can develop a risk mitigation strategy that aligns with each risk’s type and potential consequences. 

Here are four common risk mitigation strategies:

1. Risk avoidance

Risk avoidance is a risk mitigation strategy that focuses on avoiding any action that has the potential to end in unwanted risk. When using this strategy, you simply bypass risk by choosing not to engage in the action that could cause the risk to occur. 

When to use risk avoidance: You’ll likely use the risk avoidance strategy if the outcome of a potential threat is high risk, like if the risk occurring would significantly impact the company’s financial standing. 

Example: Let’s say your company plans to open a second office. While evaluating specific risks, you realize your original location isn’t generating enough profit to support a second location, meaning you’ll have to secure additional financing. And, if the second location gets delayed or doesn’t become profitable quickly, you could struggle to keep up with the payment plan. Since this could cause a ripple effect across your company—ultimately impacting the company’s ability to perform and be profitable—you might choose to pause the expansion, avoiding the risk entirely. 

2. Risk reduction or control

Risk reduction (also known as risk control) involves taking actions that can help reduce the likelihood of a risk happening or limit the impact of the risk if it does occur. When using the risk reduction strategy, it’s important to define risks at the beginning of the project, as well as proactively track risks during the project, so you can monitor them and act if they do occur. 

When to use risk reduction: You might choose to use the risk reduction strategy if you think you can control the potential risks with mitigation actions like process tweaks or updates.

Example: Imagine you’re launching a marketing campaign. At the beginning of the project, you assess project risks and find that the project has the potential to go over schedule. You review the risk and decide that the likelihood of the project running over is low and can be controlled. To reduce the risk likelihood, you start by identifying why the risk might happen, such as underscoped tasks, production delays, unexpected bugs, and resourcing constraints. Then, you implement control methods like using team calendar software to avoid scheduling errors, create a scope management plan , and correctly allocating resources . 

3. Risk transference 

A risk transference strategy involves shifting the consequences of potential risks to a third party. Using this strategy, you protect your business by ensuring that the company won’t be held responsible if the risk occurs. 

A common example of risk transference is buying insurance. Your business pays a premium to an insurance company to accept the cost of certain defined risks. If that risk occurs, the insurance company pays the damages, so your company isn’t financially liable. You can also transfer risk through outsourcing or using contractors. 

When to use risk transference: Risk transference is a smart risk mitigation strategy when you want to protect your company from potential financial liabilities. It can also be a good strategy to use when the likelihood of a risk occurring is low, but the financial impact the company would incur if the risk occurred is high. 

Example: Say your company is launching a new product. Since you currently don’t have the resources required to produce the product in-house—and getting the process set up would cost the company too much upfront—you decide to outsource the production to a third-party contractor. Now, your company will avoid upfront costs, and if the contractor delays or otherwise impacts production, they’ll cover any financial losses your company might incur.

Risk transfer does have downsides, however. Just because you protected your company from the financial liability of the risk doesn’t mean that the business can’t suffer the negative consequences of the risk. For example, if an issue with the contractor delays your product launch, your company won’t be liable for financial losses, but the delayed launch can still impact the business’s brand and reputation—so take these factors into account when considering your risk mitigation strategy. 

4. Risk acceptance 

Just like the name suggests, risk acceptance is the acknowledgment and acceptance of a potential risk. Unlike risk reduction, risk acceptance doesn’t involve any attempt to mitigate risk—instead, it means moving forward as-is with the understanding that the risk might occur. If the impact or likelihood of the risk increases to an unacceptable level, you can shift your risk mitigation strategy accordingly.

When to use risk acceptance: You’ll likely use a risk acceptance strategy when you’ve deemed the risk level of a potential risk acceptable, such as if the potential risk is unlikely to occur, when any negative consequences of the risk are minor, or when the cost of mitigating the risk would be higher than the costs incurred if the risk happened.

Example: Say your flower delivery company has relied on the same florist for roses for five years. In the five years that the florist has supplied roses, they’ve never missed a Valentine’s Day shipment. Valentine’s Day is one of your biggest profitability-drivers, so if the florist was to miss a shipment, it could impact company revenue and reputation. But it’s never happened. Plus, finding another florist and contracting them for a backup supply of flowers would cost the company a good chunk of change and could result in waste. Since the risk that the supplier will miss a shipment is low, your company deems it acceptable and moves forward without taking steps to protect against the risk. 

How to continually monitor business risk

Risk mitigation isn’t static—it’s a constantly evolving process. Once you’ve settled on a risk mitigation strategy, you’ll want to continue monitoring risks to ensure they don’t increase in likelihood or severity and to make sure you’re prepared if new risks pop up. 

Here are a few ways you can monitor business risks:

Start with a defined project roadmap to ensure all team members and stakeholders are on the same page regarding project scope and deliverables. 

Set up regular check-ins to monitor project scope and progress.

Follow project progress and performance in real-time with project management software that tracks project status. 

Monitor spending and expenses for effective cost control .

Define your project budget upfront. 

Use time management techniques and tools (like daily planner templates ) to keep work on track. 

Create a resource allocation plan to reduce resourcing risks. 

Proactively monitor changing business conditions and adjust your business strategy as needed. 

Put a crisis management plan in place to respond to business-critical threats.  

Reduced risk means less uncertainty for you and your team

All businesses face risk, and risk is scary—especially in times of change or uncertainty. By using risk mitigation strategies, you can help shield your business and your team from unnecessary risk, reducing uncertainty and moving your business forward. 

Related resources

How executives and individual contributors differ when it comes to AI

Fiedler’s Contingency Theory: Why leadership isn’t uniform

What is management by objectives (MBO)?

How to find alignment on AI

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Make Risk Mitigation Work for Your Business (+Template)

The best kind of emergency is one that never happens. But you can manage the impact of unavoidable events with a good risk mitigation plan. In this article, learn the benefits of prioritizing risk mitigation and how to build your own plan.

What Is Risk Mitigation?

• The 4 Risk Responses

How to Build a Risk Mitigation Plan

• 3 Tools to Support Your Plan

Emergencies come in many different shapes and sizes, but the thread you need to follow in each case is the potential for harm to your people and operations. Some of these emergencies are simply unavoidable. But the more you can anticipate and prepare for, the better your chances of organizational safety, security, and resilience.

When Hurricane Harvey severely threatened Gulf Coast Regional Blood Center’s operations in Houston, failure wasn’t an option. Gulf Coast residents were in dire need of blood due to the large number of injuries sustained in the hurricane. In short: They didn’t have time to scale back and regroup after the hurricane—they had to adapt right away. So, they used their AlertMedia mass notification system to create ad-hoc procedures to keep blood circulating in the middle of one of the worst storms the U.S. has ever seen. This is the essence of risk mitigation.

To mitigate risk, you don’t have to overhaul your operations. As Steve Richard, SVP of Enterprise Risk Management for Becton Dickinson, puts it , “We focus on avoiding bad things but also on enabling the businesses to operate without disruption. We partner with our executives to make sure what we ask of them is less intrusive and as efficient as possible. We want the benefits of a sound ERM program with as little burden as possible.”

Every business faces risks—weather and natural disasters,   occupational hazard s, cybersecurity and system outages, and workplace violence—and there is no way to fully avoid every possible risk. But with a good risk management process in place and a strong risk mitigation plan, you can prevent a crisis event from having a massive impact on your business, getting as close as you can to stopping an emergency before it starts.

Download Our Risk Mitigation Plan Template

Risk mitigation is the process of planning and preparing for a potential threat or emergency in order to lessen the risk and/or impact.

You can mitigate risk for all kinds of emergencies in a variety of ways. For example, to mitigate the risk of workplace violence, you can focus on

• Running active shooter drills
• Performing target hardening  on your building to eliminate vulnerabilities
• Training your employees in tactics such as run, hide, fight

For a natural disaster like a hurrican e, you can mitigate risk by

• Creating an evacuation plan
• Understanding hurricane categories
• Monitoring for storms  to detect them early
• Securing your facilities
• Communicating with employees throughout the event

The risks you face will vary depending on your location and industry—and if your business has multiple locations, there will be different risks to each site. But the goal of risk mitigation is to identify your specific risks properly, and your vulnerabilities to those risks and then work to address them proactively.

With common risk mitigation strategies, you are simultaneously

• Working to reduce your risk profile by lessening the likelihood of an emergency
• Strengthening your response to lessen the impact if an emergency does occur

Risk mitigation vs. risk prevention

Simply put, risk mitigation is the practice of diminishing the impact of an event, while risk prevention focuses on avoiding those events entirely.

There are a lot of similarities between risk mitigation actions and risk prevention since they both work toward the goal of protecting an organization, its people, and its business processes. In fact, they are almost always used in conjunction to create multiple layers of security.

Prevention is a major element of emergency preparedness, but there is no way to prevent all emergencies all the time, so it’s just as important to plan how you will lessen the impact when something does go wrong. That’s where risk mitigation comes into play.

Which Risk Response Is Right for Your Business?

A critical aspect of good risk mitigation and overall risk management is understanding what kinds of risks your business faces. Before you dive into building out a plan, first you need to perform risk identification and prioritization through a threat assessment .

This risk assessment is a vital tool for businesses to navigate the complex landscape of potential threats. By identifying and prioritizing operational risks that are relevant to your business, you can allocate mitigation resources more effectively, focusing on the most critical areas.

Lukas Quanstrom, CEO & Co-Founder of Ontic, shared with us how he better understands business threats on The Employee Safety Podcast . “Once a potential threat has been identified, the next step is really to research the threat and apply data from sources like public records, social media, and the dark net so that you can learn as much as possible about the identified threat. Next, you should assess the threat to determine the severity and the risk it poses to your organization by leveraging professional threat assessment methodologies.”

With a better grasp of your risk level from your threat assessment, you can make more informed decisions about your risk mitigation strategies and responses. You can also conduct a business impact analysis to understand the potential short- and long-term effects better.

An example of risk mitigation

Let’s look at an example of a risk that should be mitigated: fire.

Fires pose a huge risk to people and property for businesses of all kinds, from corporate offices to restaurants, hotels, and even warehouses. More than  100,000 commercial fires occur every year, with damage costs reaching up to $2.4 billion annually, plus nearly 100 deaths and more than 1,000 injuries. This is a risk with a clear and present danger, and every business should have some sort of mitigation strategy in place. That strategy should address both prevention to reduce the likelihood of a fire occurring in the first place and fire response to ensure a safe evacuation if a fire emergency does occur.

The Four Risk Responses

Here are the four different types of risk responses you’ll use to address risks and how they can help your organization manage threats. To demonstrate these responses, we’ve written out how these business risk mitigation examples could be used for a fire threat.

Now that you know the basics of mitigating risk, it’s time to build out a plan. Having a documented mitigation plan ensures you know exactly what to do before and during an emergency to avoid, control, transfer, and reduce that risk.

You can build a brand-new plan solely dedicated to effective risk mitigation, or you can add your planned mitigation strategies to another emergency management or business continuity plan . No matter where you keep your plan, simply follow these steps, and you will be ready to mitigate any risk you face.

• Gather stakeholders:  Make sure all business leaders and those who might be involved in the risk mitigation process, or at least the major decision-makers, are involved in the planning process.
• Run a risk assessment:  Use your threat intelligence software or your own research to determine what possible risk events your business faces so you can plan for them. This is a great time to use a risk matrix to map out what is a top priority. Remember to account for different kinds of threats in your risk analysis, from supply chain to cybersecurity to financial risks.
• Determine prevention measures:  Once you have your list of identified risks, document the mitigation actions you can take now that will help prevent and avoid those emergencies. Make sure to do this for each potential emergency you identified in your threat assessment. This is a great time to reference your risk matrix so that you can prioritize the most significant threats.
• Create an action plan:  Next, document all of the steps you will take for the other three risk mitigation strategies—control, transfer, and reduce. Plan what you will do before the emergency so you don’t need to spend time wondering if you’re doing the right thing while it happens.
• Run drills:  Once you have your plan documented, run drills for the different actions or responses so you and your employees can rely on muscle memory. Drills will also help expose any gaps in your plan so you can fill them. You may need to adjust your plan after a drill, so using a documentation tool like an after-action report is helpful.
• Monitor risks:  Continuously monitor all potential risks so you know when to act. If you don’t know a threat is imminent, you won’t be able to respond quickly enough. Use a risk monitoring system if you want to integrate automation or manually track ongoing and new risks, so you are ready to perform the necessary mitigation activities.
• Communicate openly and consistently:  Staying in touch with all of your team members and stakeholders will help keep everyone informed about any potential threats and ensure all mitigation efforts are being implemented. Additionally, communication is one of your best tools during a crisis to keep people safe and mitigate harm. A reliable emergency communication system  can help you communicate quickly and easily.

3 Tools for Risk Mitigation

Risk mitigation can be a bit complicated, especially when you are trying to prepare for the wide range of business risks you might face. We’ve been using workplace fires as an example, but your business may need to mitigate many more risks, including natural disasters, systems outages, disease outbreaks, and workplace violence.

Trying to plan for and implement these strategies for so many different risks is easier with good tools at hand. Here are a few you should lean on to make your risk mitigation efforts more effective.

Threat intelligence software

It’s impossible to mitigate a risk if you don’t know your business is vulnerable to it. So, performing a risk assessment for your business is critical. Finding a reliable threat intelligence system  can make this much easier by removing a lot of the guesswork, particularly if it has a threat history feature to show what threats your area has faced in the past. Make sure to track and document all possible threats so you are prepared to make the most informed decisions when preparing to mitigate your organization’s risks.

Risk matrix

Once you have your risks documented, you can use a risk matrix to map out how likely each risk is and the potential impact of the risk on your business operations. For example, a fire in an office might be low-risk, but it could have a moderate-to-high impact if it occurs, whereas a fire in a restaurant has a high risk, with a moderate-to-high impact. Knowing the probability and potential impact helps you prioritize what to plan for. Common risks with high probability and high impact should be the first on your list when you are building out risk mitigation plans, and they will likely require the most preparation.

After-action report

After running drills for your plan, document the experience and create a process to improve on aspects of your plan that failed or did not play out as expected. With an  after-action report template , it is easy to go through what went well, what went wrong, and what you need to do to make the plan better. Complete the same process following actual incidents and emergencies to improve your preparedness at every opportunity.

Addressing a Disaster Before It Starts

Without a risk mitigation plan, you will always be playing catch up. By prioritizing risk mitigation in your business, you will lower the number of emergencies your business faces and reduce any major impact on your business if those emergencies do occur. All it takes is a bit of planning and some preventative action, and you can stop a catastrophic disaster or temper it before it even starts.

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Risk Mitigation Plan Template

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Risk Mitigation

Not all disasters can be prevented, but there are many mitigation strategies that can reduce damage to your business from a disaster. Implementing those strategies before a disaster may make it easier for your business to recover.

Strategies to Consider

• Research applicable fire prevention regulations, national standards and best practices to identify mitigation opportunities and requirements.
• Speak with your insurance agent, broker or underwriter to determine if they provide consultation services to help customize protection for a new or renovated facility. Highly protected facilities may be eligible for reduced insurance premiums.
• Consider selecting a building site that is not subject to flood, storm surge, significant ground shaking from earthquakes or in proximity to hazardous facilities . Building construction should meet applicable building codes that include requirements for fire protection and life safety.
• Strategies to mitigate business disruption include providing uninterruptible power supplies (UPS) and an emergency standby generator for critical equipment. Developing a business continuity plan with recovery strategies is another method of risk mitigation.

Insurance as Financial Mitigation

Purchasing insurance is a way to reduce the financial impact of a business interruption, loss or damage to a facility or equipment. Review your insurance policies with your agents, brokers or directly with your insurers to determine whether your insurance policies adequately cover your potential losses.

Flood insurance coverage for a facility located within a flood zone may be purchased through the National Flood Insurance Program . Earthquake, terrorism and pollution coverage may be purchased separately or as an endorsement to an existing policy.

Business interruption coverage reimburses profits and certain continuing expenses during a business shutdown. Contingent business interruption coverage is available to reimburse losses caused by a supplier failure. Endorsements to standard policies can cover extra expenses such as the additional costs for expedited delivery of replacement machinery following an insured loss.

Risk Mitigation Resources

 Natural Hazards

• Protect Your Property from High Winds Series (FEMA)
• Equipment Start-Up, Shutdown & Maintenance , Maintenance Fact Sheets - Hartford Steam Boiler Inspection and Insurance Co.

Human-Caused Intentional Acts

• Workplace Violence—Issues in Response - Federal Bureau of Investigation
• Reference Manual to Mitigate Potential Terrorist Attacks Against Buildings – FEMA 426
• Primer for Design of Commercial Buildings to Mitigate Terrorist Attacks – FEMA 427
• Site and Urban Design for Security: Guidance against Potential Terrorist Attacks – FEMA 430
• Incremental Protection for Existing Commercial Buildings from Terrorists Attack: Providing Protection to People and Buildings – FEMA 459
• Guidance for Filtration and Air-Cleaning Systems to Protect Building Environments from Airborne Chemical, Biological, or Radiological Attacks - U.S. Centers for Disease Control and Prevention

Technological Hazards

• Computer Security Resource Center - National Institute of Standards and Technology (NIST), Computer Security Division Special Publications (800 Series).
• Information Security Handbook: A Guide for Managers - NIST, SP 800-100
• Risk Management Guide for Information Technology Systems - NIST, SP 800-30
• Generally Accepted Principles and Practices for Securing Information Technology Systems - NIST, SP 800-14
• An Introduction to Computer Security: The NIST Handbook - NIST, SP 800-12

Last Updated: 02/28/2024

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The Ultimate Checklist for Creating a Risk Mitigation Plan

Related on MHA Consulting: So You Want to Be a Risk Mitigator: 5 Tips to Help You Master the Craft

An Ongoing Series on Risk

The risk mitigation plan checklist.

The Importance of Implementation

Consolidating your action items, achieving success at risk mitigation, further reading, checking it twice: the corporate risk mitigation checklist.

• Every Single Day: Make Risk Management Part of Your Company’s Culture

So You Want to Be a Risk Mitigator: 5 Tips to Help You Master the Craft

• Don’t Just Hope: Choosing Strategies to Mitigate Risk
• A Sample Threat and Risk Assessment: The Case of Acme Widget Corp.
• The Risk Management Process: Manage Uncertainty, Then Repeat
• A Great Place to Start: The ISO 31000 Risk Management Guidelines

Michael Herrera

Michael Herrera is the Chief Executive Officer (CEO) of MHA. In his role, Michael provides global leadership to the entire set of industry practices and horizontal capabilities within MHA. Under his leadership, MHA has become a leading provider of Business Continuity and Disaster Recovery services to organizations on a global level. He is also the founder of BCMMETRICS, a leading cloud based tool designed to assess business continuity compliance and residual risk. Michael is a well-known and sought after speaker on Business Continuity issues at local and national contingency planner chapter meetings and conferences. Prior to founding MHA, he was a Regional VP for Bank of America, where he was responsible for Business Continuity across the southwest region.

Is Your Greatest BCM Risk Your BCM Team?

Is our business continuity program a sham, 2 thoughts on “ the ultimate checklist for creating a risk mitigation plan ”.

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Having done this for a living, I concur. The list is straight forward, getting every exec and division to follow through is Herculean.

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How to Mitigate Project Risks: Risk Mitigation Starter Kit, Examples, and Tips From the Experts

By Kate Eby | October 27, 2022

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Project risk mitigation reduces the impact of the threats that face your project. We’ve worked with experts to compile best practices and tools for project risk mitigation, as well as helpful real-world examples. 

Included in this article, you’ll find a project risk mitigation starter kit , examples of risk mitigation for construction and IT projects , and a list of best practices from industry experts .

What Is Project Risk Mitigation?

Project risk mitigation is a strategic plan to lessen the impact or likelihood of negative risk events. On a team, the project manager is responsible for overseeing the risk mitigation process. Risk mitigation addresses threats to project delivery and continuity.

Why Is It Important to Mitigate Risks in Project Management?

Project managers mitigate risks so that risk events do not derail projects. Risks can impact the cost, scope, or schedule of a project. The risk mitigation process prepares project managers to manage uncertainty.

New, innovative products and services are key to growth and improvement, but with new innovation comes risk. Ignoring project risks , or hoping they do not occur, is ineffective. Project managers need to manage risk as part of their project planning process. According to writers at McKinsey , the absence of risk mitigation leaves companies open to “serious risk events that can be crippling.”

“Risks can lead to an overage in your approved budget, delays in your project timeline, or missed expectations,” shares Amy Black , Director of Security, Privacy, and Risk at RSM US LLP. “Even more, unmitigated issues may lead to project failure altogether. It is important to mitigate risks to avoid any of these unfortunate outcomes. Identifying risks as early in the project timeline as possible gives the project manager a chance to course correct before a risk comes to fruition.”

The success of a project depends on whether or not project managers can either prevent or mitigate the impact of adverse risks. Alexis Nicole White , a senior project management consultant with North Highland, stresses that when project costs increase, the quality of a product suffers. “It is very likely that the product quality begins to suffer when, due to budget, the project schedule is compressed into a tighter delivery period or resources must work longer hours to complete the project sooner.” 

In his comprehensive study , “Risk Mitigation Strategies in Innovative Projects,” Riaz Ahmed explains that incorporating risk mitigation can bring about the following benefits: 

• Faster Project Completion: Risk mitigation actions reduce overall project risk, thus accelerating project completion.
• More Predictable Schedules: Project managers who enforce risk mitigation strategies experience fewer surprises and therefore have more predictable project schedules.
• Reduce Project Costs: When teams are able to complete projects on or ahead of schedule, it reduces the project’s cost.
• Produce a Historical Audit Record: Risk mitigation provides an audit record of risk handling effort in a project that may provide useful insight for future projects.
• Maximize Shareholder Value: By reducing unanticipated costs and increasing the success rate of projects, risk mitigation helps maximize shareholder value.

How Do You Mitigate Risk on a Project?

In order to mitigate project risk, follow a standard risk mitigation process. This involves identifying risks and implementing a strategy for each risk. By doing so, you can minimize the chances of project disruption.  

These are the two steps of any risk mitigation process:

• Identify the potential risk.
• Implement a strategy that will remove or lessen the impact of each risk.

As you work through the risk identification and mitigation processes, keep lines of communication open. “Regular, open dialogue with your project team and stakeholders helps project managers identify unanticipated risks,” says Black. “Prompting your team with open-ended questions to encourage upfront and honest conversations allows the team to work together on risk mitigation strategies that account for all possibilities.”

Types of Project Risk Mitigation Processes

Any risk mitigation process or strategy will help reduce risks to a project. Some strategies include avoiding, assuming, controlling, or transferring risks. A risk mitigation plan involves measuring the impact of the risk and preparing a response strategy. 

The following types of risk mitigation processes and strategies may be helpful as you assess, plan for, manage , and monitor your project risks:

• Avoid the Risk: Avoiding the risk involves taking action to resolve or eliminate the threat. For example, if there is a risk that scheduling conflicts might delay delivery, the team can create a comprehensive calendar to prevent these conflicts.
• Accept or Assume the Risk: If the consequences of the risk are not dire, the team may choose to acknowledge, but not act on, the risk. For example, if there is a chance a project will be slightly over budget, an acceptance strategy might be to assess and acknowledge the consequences of going over budget. 
• Reduce, Mitigate, or Control the Risk: The goal of reducing risk is to accept the identified risk and apply measures to minimize its impact. For example, if the building materials required to start construction are arriving from multiple vendors, the risk that certain materials will be delayed is out of the project manager’s control and can’t be eliminated. However, the project manager can reduce the risk by setting deadlines, following up with vendors on shipment status, and sourcing as many materials as possible from local vendors. 
• Transfer the Risk: Assigning the risk to a third party mitigates the consequences of risk by placing responsibility on a third party. For example, transferring product security protocols to  a cyber security provider removes the burden and the necessity for specialized expertise. This allows the project team to focus on their assignments while leaving one issue to a third party. 

Risk mitigation techniques can increase project complexity and costs. However, expending resources on risk management can have benefits in the long run. In his study for OCLC , H. Frank Cervone concludes, “it is easier and less costly to avoid risk in the first place, rather than attempting to fix or remediate problems once they have occurred. Not surprisingly then, when good project managers think about risk management, they focus on mitigating risk within the overall project.”

Applying a risk mitigation strategy to each risk may help proactively address risk events. Alan Zucker, Founding Principal at  Project Management Essentials , says, "Reducing, mitigating, or controlling the risk may be the most commonly used response strategy because avoiding the risk or transferring it to another party may not be feasible.”  

Zucker shares an example of failed risk mitigation from his experience with software project management. “A new software application project required a new server to run in production,” he says. “The team knew this. However, the team did a bad job mitigating the project risk, and the project was delayed because a server was not purchased and configured in time. This was a relatively easy risk to manage. The risk statement would have been: if a new server is not purchased and configured by the release date, then the release may be delayed. The impact of this risk would have been high. Initially, the likelihood would have been low because there was plenty of time to address the threat, but as the project progressed, the likelihood of the risk impacting the release increased.”  

Zucker proposes these risk mitigation strategies that the team could employ to reduce the impact of the risk on this project: 

• Accept the Risk: “Establish time-based triggers so that at various points in the project, the lack of progress on procuring and configuring the new server will escalate,” he says.
• Reduce the Risk: “Reconfiguring existing lower environments to production or hosting the application with another could reduce the likelihood and impact of not having a new server,” explains Zucker.  
• Transfer the Risk: “Move the application to the cloud,” he suggests. “The risk of running the app would then be on the service provider.”

Project Risk Mitigation Starter Kit

Get everything you need for mitigating project risk with this free, downloadable project risk mitigation starter kit. The kit includes a risk mitigation checklist, risk matrix and assessment  templates, a risk action plan, and a project risk log in one easy-to-download file.

Download the Project Risk Mitigation Starter Kit

In this kit, you’ll find the following:

• A project risk mitigation checklist in Microsoft Word , Google Docs , and Adobe PDF formats to help you account for every step in the risk mitigation process. 
• A project risk mitigation management matrix template for Excel to help you track and analyze risks and assign risk mitigation strategies in one, centralized location.
• A risk action plan template for Excel to help you track details of your mitigation plan.
• A project risk assessment and analysis template for Excel to document risk levels and mitigation details. 
• A project risk log template for Excel to track and manage important risks and assign them owners and mitigation plans.

Example of Project Risk Mitigation for a Construction Project

Each industry vertical has unique risks. Construction risks result from poor resource management, scheduling errors, policy failures, and unclear project duties. The construction project manager will define a mitigation strategy for each risk or hazard. 

For example, due to disruptions in the global supply chain, shipment schedules are always in flux. If there is a supply chain disruption during a construction project, shipping delays might result in costly penalties for late project completion. 

These are some actions a construction project manager might take to mitigate this risk:

• Avoid: Take an action that will eliminate the risk. For example, choose to source all materials from local providers, who are not impacted by global supply chain disruptions. 
• Transfer: Transfer risk to another party. For example, hire a subcontractor to source building materials so that they assume the risk of penalties for delayed construction.
• Reduce: Reduce the likelihood of the risk or its impact. Mitigate by maintaining a supplies warehouse or increasing contract prices to account for change.
• Accept: Accept the risk and create a backup plan by preparing customers for potential price increases and delays.

Example of Project Risk Mitigation for an IT Project

The IT Infrastructure Library (ITIL) is a service management framework for IT providers. ITIL risk management best practices and guides risk prioritization for the IT services lifecycle. These risk mitigation strategies include avoiding, reducing, sharing, and accepting risk. 

A major risk to many IT projects is a lack of specialized knowledge. If a team member who can perform a specific IT function is not available, it could delay or derail a project. 

Using ITIL guidelines , these are some strategies a project manager might use to mitigate risk for this project:

• Risk Avoidance: Prevent the risk by not performing the risky activity. For example, if there is not a team member available who has specialized knowledge of C++, then a project manager might choose to rework the project so that knowledge is not necessary.
• Risk Modification or Reduction: Implement controls to reduce the likelihood or impact of the risk. For example, a team leader might choose to train an existing employee on the specialized skill so that they can perform those tasks for the project.
• Risk Sharing: Reduce the impact by passing some risk to a third party. For example, a project manager might hire a contractor to complete a portion of the project that internal team members are not able to complete. 
• Risk Retention or Acceptance: The decision to accept the risk because it’s below an acceptable threshold. For example, a manager might proceed with a project because the time conflict with a very low priority project may impact scheduling.

Black shares how project risk mitigation strategies contribute to successful project implementation at her work. “We are implementing a new project management software that will replace an existing application and be utilized by thousands of consulting professionals,” she says. “The project team formed end-user subcommittees that are responsible for application user testing, business case development, and training for all users. During the initial business case development, the subcommittee identified users using the previous applications in vastly different ways. This created a potential issue as the new software wasn’t originally intended to meet all documented expectations.

“The subcommittees were able to identify and document the business cases early,” she continues. “While the mitigation strategies still delayed the originally planned timeline, the project manager could adequately document all use-case scenarios and work with key stakeholders and leadership to reassess the budget to produce a quality deliverable that met everyone’s expectations. This ultimately led to greater acceptance of the new software and smoother implementation.”

Project Risk Mitigation Best Practices

Following project risk mitigation best practices helps ensure that you minimize the impact of negative risks on your projects. Some best practices include staying transparent, documenting risks, monitoring risks continuously, and starting risk mitigation early.

The best project risk mitigation practices help the project manager manage uncertainty. Here are some best practices to help ensure that your project risk mitigation is successful:

• Clear Communication: “Throughout every project touchpoint and status update, I always review the status of the project’s risks first. For example, if the risk is inclement weather, I’d say, ‘Weather – accepting.’ We are still accepting the risk of inclement weather by reviewing the weather daily and ensuring all resources are properly informed about the plan of action should severe weather storms appear,” shares White.  
• Transparency: “A best practice for mitigating risks is to ensure you have a viable Risk Issue Action and Decision (RAID) log updated and transparently available for all team members to review at any time. Additionally, review these items with your team before each meeting,” says White. “Do not just document said items and keep them in your possessions. Document them and be transparent about the team’s concerns. As project managers, we’re supposed to confront and address any issues that may compromise the integrity of the project, which means managing risks appropriately.”
• Risk Documentation: “Document your project risks often. Even if the risk never materializes, documenting it keeps it at the forefront of the team’s minds and can help avoid any additional risks or unwanted changes,” advises Black.
• Continuous Monitoring: Risk mitigation is not something that a team does once. Teams need to continually identify and analyze vulnerabilities and threats so that risk mitigation measures can be taken before they impact the project.
• Policy Documentation: Be sure to clearly document your risk mitigation process, strategies, and roles, and ensure that they are easily findable and accessible for the team and stakeholders. 
• Early Risk Mitigation: Risk mitigation requires early intervention. Preparing for potential risks and taking action early in the project can help minimize disruption.

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Know the Six Risk Mitigation Strategies That Have High Impact

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Did you know by 2029, the enterprise risk management market is set to surge, reaching a staggering USD 6.20 billion at a steady growth rate of 5.04%? This underscores the risk of escalating technological investment, presenting tech leaders with perpetual challenges in safeguarding their projects and businesses. As a tech leader, you’re familiar with the risks that ubiquitously threaten the digital expanse and projects. In the digital world, innovation is the currency, but uncertainty is the constant companion. How can your business endure the uncertainties and emerge stronger and more resilient? This question looms in every business and tech leader's mind. Organizations are operating in a high-risk world from a technology standpoint. The ability to assess and manage risks has perhaps never been more important.

The traditional manual approaches to risk management are time-consuming, error-prone, and often inadequate for the modern business landscape. A risk mitigation framework is crucial because risk can never be totally eliminated, it can only be effectively managed. Without robust project risk mitigation measures, organizations significantly increase their exposure to the detrimental impacts of failed projects and heightened security vulnerabilities. Therefore, companies must adopt proactive and strong predictive intelligence solutions for effective risk mitigation. This article explores the importance of developing robust risk mitigation, its impact, the risk mitigation frameworks, and its benefits. These frameworks can help organizations anticipate, identify, and reduce potential project risks with the help of modern analytical solutions before they manifest into costly organizational disruptions.

What Is Risk Mitigation?

Risk mitigation is the process of identifying, evaluating, and addressing potential risks to an organization's projects, operations, and initiatives. It involves implementing strategies and measures to reduce the likelihood or impact of adverse events, ensuring business continuity, and minimizing potential losses or disruptions. By proactively managing risks, organizations can enhance their resilience, protect their investments, and achieve their goals more effectively.

Regarding risk mitigation, technology leaders prefer to leverage advanced AI-led solutions to provide significant advantages and have comprehensive oversight of their projects and initiatives. These advanced technologies enable organizations to gain valuable insights, make data-driven decisions, and implement proactive measures to mitigate potential risks before they materialize. By harnessing the power of predictive intelligence, businesses can stay ahead of potential threats and respond quickly to emerging risks, ensuring they remain agile and competitive in their respective industries.

Why Is Risk Mitigation Important for Businesses?

Embracing risk mitigation is pivotal for businesses to navigate the ever-changing landscape of challenges. It's about fostering a resilient framework that empowers organizations to thrive amidst adversity. Here's a closer look:

• Mitigates the Impact of Risks - Anticipating potential pitfalls allows businesses to minimize their severity.
• Facilitates Early Risk Identification - Timely detection of risks enables prompt interventions, preventing escalation.
• Reduces Risk Likelihood - Proactive measures lower the chances of risk occurrence.
• Fosters Proactive Risk Management - A forward-looking strategy pre-emptively addresses risks.

This highlights the need to leverage futuristic AI solutions in a robust risk mitigation strategy to ensure business continuity and success.

The illustration below is based on the Enterprise Risk Management Initiative, which summarizes insights from 454 professionals, some representing multiple categories.

Insight based on the above graphic: Over a third of organizations, particularly larger ones, feel pressured by unexpected risks to enhance risk management. Emerging practices and governance demands are driving a broader focus on risk management.

Four Approaches to Project Risk Mitigation

Decision-making and risk mitigation hinge on four strategies to manage potential impacts effectively:

• Risk Avoidance - Withdrawing or refraining from participating in risky scenarios.
• Risk Reduction - Implementing measures to keep risks at an acceptable level and minimize potential losses, especially in critical projects.
• Risk Transfer - Shifting or sharing risk through mechanisms such as insurance or outsourcing.
• Risk Retention - Accepting and accounting for identified risks within budgeting and resource allocation.

Addressing these risks through meticulous preparation, effective communication, and adaptive strategies is crucial for effective project execution and success. More importantly, harnessing sophisticated AI-driven predictive analytics is essential for mitigating risks in projects.

Types of Project Risk Mitigation Frameworks

Project risk mitigation frameworks assist in pinpointing, evaluating, and strategizing against potential risks. Key frameworks include:

• PMBOK’s Risk Management Process
• Active Risk Management
• Risk Management Process (RMP)
• Risk Breakdown Structure (RBS)

Selecting a framework and modern business solution that matches project specifics, industry norms, and organizational demands is essential. The aim is to manage risks effectively to safeguard project goals, schedules, assets, and quality, thus ensuring project success.

Key Components of Project Risk Mitigation

Mitigating risks in a project entails strategies to decrease the chances and severity of issues that may impact the project’s outcome. The key components are:

• Risk Identification - Identifying potential risks that could impact the project scope , schedule, budget, resources, or quality.
• Risk Assessment - Analyzing identified risks to determine their likelihood of occurrence and potential impact.
• Risk Response Planning - Developing strategies to mitigate, avoid, transfer, or accept identified risks.
• Risk Monitoring and Control - Continuously monitoring risk factors and implementing planned responses throughout the project lifecycle.
• Change Management - Establishing processes to identify, evaluate, and manage changes that could introduce new risks or affect existing ones.
• Stakeholder Management - Engaging stakeholders to align expectations, communicate risk factors, and gather input for mitigation strategies.
• Lessons Learned - Documenting and sharing experiences to improve risk management practices for future projects.

Crucial Steps in Project Risk Mitigation Assessment

A project risk mitigation assessment is crucial for organizations to identify, evaluate, and prioritize potential risks to project objectives. By following these steps, project teams can determine the likelihood and impact of potential risks, prioritize them, and recommend mitigation strategies.

• Define project goals, deliverables, and boundaries.
• Collaborate with stakeholders and subject matter experts.
• Define potential events or factors that could impact the project.
• Include internal and external factors, such as resource constraints, requirement changes, and external dependencies.
• Leverage predictive intelligence solutions and advanced analytical solutions to identify potential risks based on historical data and trends.
• Utilize analysis techniques, lessons learned, and historical data.
• Determine the likelihood of risk occurrence and its potential impact on project objectives.
• Harness advanced analytical solutions to quantify risk exposures and simulate potential scenarios.
• Assess current processes, policies, and practices that mitigate risks.
• Identify gaps or inefficiencies in existing controls.
• Assess the overall risk exposure for each identified risk.
• Consider factors such as existing controls' likelihood, impact, and effectiveness.
• Employ predictive modeling techniques to forecast risk exposure based on various factors.
• Determine the risk level for each identified risk.
• Use a risk matrix or scoring system to prioritize risks based on exposure.
• Develop strategies to mitigate, avoid, transfer, or accept prioritized risks.
• Consider the proposed strategies' cost, time, and resource implications.
• Leverage advanced analytical solutions to evaluate the effectiveness of mitigation strategies and optimize resource allocation.
• Document identified risks, priorities, and mitigation strategies.
• Include roles, responsibilities, and monitoring processes.
• Continuously monitor risk factors and the effectiveness of mitigation strategies.
• Periodically, review and update the risk management plan.
• Use predictive intelligence and analytical solutions to track risk indicators and adjust mitigation strategies as necessary.

The goal is to proactively identify and address potential risks to increase the chances of project success by harnessing AI-powered analytical solutions to build robust risk mitigation strategies.

Six Best Practices for Building a Resilient Project Risk Mitigation Strategy

Building a resilient project risk mitigation strategy is essential for organizations to navigate uncertainties and achieve successful outcomes. Here are six key best practices that can fortify your risk management framework:

• Early and Continuous Risk Vigilance - Initiate proactive risk identification from the project's inception and maintain a watchful eye throughout its lifecycle. Leverage AI-powered predictive analytics and advanced modeling techniques to anticipate potential risks before they manifest, enabling timely mitigation measures.
• Top-Down Risk Culture - Foster a culture of risk awareness and mitigation, championed by strong leadership. Encourage open communication, comprehensive risk acknowledgment, and proactive responses across all organizational levels, promoting a shared responsibility for risk management.
• Seamless Risk Communication - Establish clear and efficient communication channels for risk reporting. Prompt identification and escalation of risks are paramount for swift response and containment. Leverage AI-driven risk monitoring and alerting systems to ensure real-time visibility and informed decision-making.
• Comprehensive Risk Management Framework - Develop a thorough and adaptable risk management plan encompassing comprehensive risk assessments, robust mitigation strategies, and contingency planning. Leverage advanced analytical solutions to optimize risk mitigation strategies, ensuring a tailored and effective approach.
• Inclusive Stakeholder Collaboration —Actively engage stakeholders from diverse backgrounds in the risk mitigation dialogue. Their unique perspectives and insights contribute to a more comprehensive understanding of risks and the development of well-rounded mitigation strategies. Utilize AI solutions for stakeholder analysis to identify and prioritize stakeholder concerns.
• Continuous Improvement and Adaptation - Treat risk mitigation as an ongoing process. Continuously monitor risk factors, evaluate the effectiveness of mitigation strategies, and periodically review and update the risk management plan. Harness futuristic AI and predictive intelligence solutions to monitor risk indicators dynamically, enabling agile adjustments to mitigation strategies as project landscapes evolve.

Integrating best practices with AI and analytics transforms risk mitigation. These solutions enable understanding and managing risks, ensuring agile, informed decision-making. The result is a resilient approach to project success and industry leadership in risk management.

Benefits of Robust Project Risk Mitigation Assessments

In exploring project risk mitigation, we've delved into its importance and various components. However, it's essential to highlight the distinctive advantages that robust risk mitigation assessments offer:

• Enhanced Resilience - Regular risk monitoring and adaptive strategies allow organizations to be resilient and respond effectively to evolving threats and changing project landscapes.
• Improved Resource Allocation and Cost Savings - Comprehensive risk assessments help identify inefficiencies and optimize resource allocation, reducing costly disruptions and enhancing cost-effectiveness.
• Stakeholder Confidence and Trust - A proactive and thorough approach to risk management demonstrates commitment, bolstering stakeholder confidence and project credibility.
• Agile Decision-Making - Advanced risk assessment tools enable data-driven, proactive decision-making, allowing organizations to swiftly anticipate and respond to risks.
• Continuous Improvement Culture - Regular review and updating of risk management plans based on lessons learned fosters a culture of continuous improvement, refining the approach over time.

Incorporating these unique advantages into risk mitigation assessments elevates effectiveness, equipping organizations to navigate uncertainties successfully and achieve project success. These benefits are fully reaped when you leverage modern solutions that ensure your projects and initiatives are on the right trajectory.

In conclusion, organizations can position themselves as industry leaders in effective risk management by adopting a comprehensive risk mitigation strategy that harmonizes predictive intelligence, robust frameworks, and continuous adaptation. This proactive stance empowers businesses to navigate evolving landscapes with resilience, protect their operations, and pave the way for long-term success in an increasingly complex and dynamic business environment.

With a strategic approach, companies can safeguard their operations and proactively pinpoint project risks, securing business and project success in a dynamic, high-stakes environment. Incorporating advanced predictive intelligence solutions such as TrueProject can help significantly with risk mitigation in project execution. TrueProject provides real-time insights, uncovers vulnerabilities, and supports proactive decision-making. Early risk detection enhances risk controls and optimizes processes, leading to increased project efficiency and cost reduction. Organizations can actively manage risks by utilizing advanced AI-enabled analytical technologies, securing successful project execution, and fostering business growth.

More information on TrueProject can be found at www.trueprojectinsight.com

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Nisha Antony is an accomplished Senior Marketing Communications Specialist at TrueProject, a leader in predictive intelligence. With over 16 years of experience, she has worked as a Senior Analyst at Xchanging, a UK consulting firm, and as an Internal Communications Manager on a major cloud project at TE Connectivity. She is an insightful storyteller who creates engaging content on AI, machine learning, analytics, governance, project management, cloud platforms, workforce optimization, and leadership.

• Mark Beasley & Bruce Branson. “2023 An Overview of Enterprise Risk Management Practices - The State Of Risk Oversight.” Enterprise Risk Management: June 2023. https://erm.ncsu.edu/az/erm/i/chan/library/2023_risk_oversight_report_erm_ncstate.pdf
• Satish T. “Project Management Risks and Strategies to Mitigate Risk.” Knowledge Hut: Feb 19, 2024. https://www.knowledgehut.com/blog/project-management/what-are-project-management-risks

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What Is Risk Mitigation?

Life is a delicate balance of figuring out what we can and cannot control. It is completely natural to want to feel some sort of control over our lives; it’s actually an innate and fundamental need. If we didn’t try to control the world around us to some degree and simply allowed life to happen to us, we would never survive.

Even once we’ve determined whether or not something is beyond our control, it’s difficult to choose the actions and behaviors needed to achieve the results we want. There are times when sitting back and doing nothing leads us right where we want to be, and there are other times when inaction sets us back irreparably. The only way to make an informed decision is to apply what you’ve learned from the past, examine all sides of each choice from various perspectives and account for residual impacts.

While there is rarely a perfect solution for anything, putting substantial effort into a strategy for preventing negative outcomes usually yields positive results. Forethought and due diligence, at the very least, enables more options than just “major failure.” With that in mind, taking a risk-based approach is a smart way to navigate the complexities of life.

The same logic can be applied to managing your business. Risk-based decisions in an organization are often made considering the consequences of inaction or taking a particular action. However, implicit risk management is not enough. Only when your risk management program is a strategic and formalized process will it enable you to imagine the unimaginable and prepare for what’s to come.

So how can you stay vigilant enough to control risks that touch every process in every department?

Table of Contents

Risk mitigation is defined as the process of reducing risk exposure and minimizing the likelihood of an incident. It entails continually addressing your top risks and concerns to ensure your business is fully protected. Mitigation often takes the form of controls, or processes and procedures that regulate and guide an organization.

To better understand what risk mitigation means, let’s look at it in relation to the entire Enterprise Risk Management (ERM) process: Your controls are born out of your risks; your overall goal is to prevent certain risks from materializing. This leads you to develop policies and procedures to help prevent them. The process of strategically creating controls is what “risk mitigation” refers to.

What Are Some Risk Mitigation Examples?

To better understand risk mitigation, let’s examine some real-world examples of controls — or processes and procedures that we use in our everyday lives to reduce certain risks from materializing. Note: the following examples are aimed to provide context to better understand how mitigating activities work; every person has different circumstances and needs, so these are not to be taken as personal advice:

Mitigating financial risk

We need money to survive on a daily basis. We also need money to be prepared for the possibility of a major life event requiring a large sum to be put forward, and for when old age prevents us from being able to earn money through a job. In order to stay financially secure, we may decide to:

• Max out our retirement savings
• Keep an emergency fund in a liquid savings account
• Pay cash for everything to ensure we’re not buying anything we cannot afford

Risk mitigation in personal relationships

Positive personal relationships bring fulfillment to our lives, and like everything else we need to actively maintain the quality of those relationships to keep them from falling apart. Here are some examples of those nurturing efforts:

• Treating those we love with kindness and respect
• Consistently calling, sending cards, and visiting
• Cutting out relationships with people who don’t treat us well (in order to make more time for those that do)

Mitigating the risk of health problems

Our health is the foundation of our lives, so it’s critical to take proper measures of ensuring it. While there are infinite ways to maximize our health and minimize the risk of serious problems, here are just a few of the most common mitigation activities:

• Drinking plenty of water (the recommended amount for our body size)
• Staying away from toxic behaviors like smoking, drinking or eating processed foods
• Exercising regularly

Depending on how important certain areas of your life are to your overall identity and well-being, you may formalize your mitigating activities or not. For some, saving money, nurturing relationships, and staying healthy comes with ease and requires no structured plan to stay on track. For others, making a budget sheet, filling up a calendar with social events, or sticking to a recommended diet is critical for holding everything together.

What Are Some Risk Mitigation Strategies?

So what does risk mitigation look like within a business organization? Once you’ve identified and assessed a risk , it’s important to understand why it is a risk and determine how to respond appropriately. Let’s consider the risk of “data security.” The most basic materialization of this risk is a security breach. As soon as a security breach occurs, how would you implement ways to mitigate the impact?

Start by developing some initial best risk mitigation strategies . For example:

• Building firewalls
• Enforcing a password protection policy
• Adjusting access rights

Once these mitigation measures have been put into place to support those strategies, if a data breach occurs you can track it back to the source or failed activity. The mitigating activities should always support your broader strategy. When taking a preventative approach to data security, some of your strategies might include:

• Ongoing monitoring
• Matching all security level implementation to security requirements
• Improving employee adoption of security measures

Once you’ve identified your strategies for mitigating risk, it’s time to develop a plan for putting those strategies into motion. Ask yourself, “which actions do I need to take to carry out these strategies?”

How Do I Craft a Risk Mitigation Plan?

Organizations vary in the maturity of their risk mitigation plan; some have never formally documented anything, whereas others have extensive processes in place.

Here are two reasons why formal documentation and strategic, extensive risk management planning is critical:

Formalizing your risk mitigation processes helps uncover what is actually happening across business areas and it is the only way to get an accurate picture of where strengths and weaknesses lie.

If a risk were to materialize, you can see where something is not working effectively and/or determine if there are additional actions to take that can improve value.

Documenting, managing, and linking mitigation activities to the risk that they are helping prevent helps you see gaps and vulnerabilities in your organization. It also ensures that if a loss event or risk materializes, the activities that were meant to prevent it must be improved upon or expanded.

When thinking about developing your risk mitigation plan, keep in mind that it should address the following areas of concern:

Change Management : How do you manage change to the activity over time?

Compatibility : Is the activity aligned with other activities?

Corporate Objectives : Are performance goals advanced by this activity?

Cost : Does the cost exceed the benefit derived from it?

Dependencies : Are the relevant resource elements linked to the activity?

Effectiveness : Does it address specific risks?

Efficiency : Is it easy to implement and monitor?

Leverage : Can it provide benefit in other areas?

Ownership : Who is responsible for maintaining this activity?

Regulatory : Does it address compliance readiness standards?

Organizations often lose track of why a particular mitigation activity was implemented to begin with, and fail to recognize whether the mitigation activity is still relevant and properly maintaining the balance of risk exposure to cost. This is why it’s important to thoughtfully approach your risk mitigation strategy development.

What Are Some Risk Mitigation Best Practices?

There are endless ways to approach the development of a risk mitigation strategy. It can be overwhelming to determine the best, most effective way to mitigate risk. LogicManager has been empowering organizations to anticipate what’s ahead through effective risk management since 2005.

Through our experience, we’ve been able to determine the following best practices for risk mitigation :

Connect risks across silos

It’s essential to connect the dots between controls and their effects on each business process. You can accomplish this by connecting risk mitigation activities to respective departments, resources and the people they depend on. The best way to accomplish this is by implementing taxonomy technology . This allows you to view everything through one centralized repository. Once you’ve drawn cross-departmental connections, you’ll be able to build workflows that notify the appropriate stakeholders if at any point the resources, policies or processes connected to a given control change.

Centrally manage information

You want to be certain that the right people are looking at the most relevant information at any given time. This can be ensured by building a searchable repository of operational and procedural activities. You’ll want this repository to highlight controls, priority levels, historical changes and due dates. Note that with ERM software , you eliminate the burden of updating, notifying and tracking risks that are already maintained in another department.

Identify gaps in your risk management program

While you may have successfully addressed the risks in your organization and determined the direction of your risk mitigation efforts, it’s crucial to continually address the effectiveness of those efforts. There may be misalignments and ineffective controls that are weighing you down. Automated reporting of key risk indicators can eliminate redundancies and gaps to protect your organization.

Using Software As A Risk Mitigation Solution

Protecting your organization is the ultimate goal. To ensure your protecting it to the fullest extent, your top risks and concerns need to be continually addressed. LogicManager’s Risk Mitigation software enables you to make connections throughout your organization by linking controls to risks, activities, policies, procedures, and more to track effectiveness. Our risk mitigation software goes beyond risk-specific mitigation and helps you eliminate duplication, streamline operations, and achieve heightened business performance.

Without investing in risk mitigation, you’re eliminating areas that you can control. This leaves you entirely vulnerable to the impacts of external forces. While we may be able to achieve success in our personal lives by simply implicitly mitigating risk, it’s critical to go above and beyond in our businesses.

To realize the full potential of your business, start by investing your efforts into risk mitigation.

Manage Tomorrow’s Risks Today Using LogicManager’s Enterprise Risk Management Software

Request a demo to see how our software can protect and reduce negative impacts against your business.

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Risk Management: Understanding the Basics and Importance

In a business environment filled with uncertainties, how can business leaders steer their organizations toward sustainable success while navigating through the maze of potential risks?

One example of effective risk management in action is the case of Johnson & Johnson during the Tylenol crisis in 1982 . Faced with the crisis where cyanide-laced Tylenol capsules resulted in several deaths, Johnson & Johnson swiftly and decisively recalled all Tylenol products from the market, despite the financial implications. 

This move, driven by a commitment to consumer safety and ethical responsibility, not only managed the immediate risk but also rebuilt public trust in the brand. This incident is a classic example of how risk management extends beyond financial and operational risks to encompass ethical considerations and consumer trust.

The answer often lies at the executive level, where understanding and implementing effective risk management becomes a pivotal aspect of strategic decision-making. This process is crucial for day-to-day operations and shaping long-term business strategies and policies at the C-suite and board levels.

Risk management is the systematic process of identifying, assessing, and prioritizing potential risks and implementing strategies to minimize or mitigate their impact. 

It involves analyzing uncertainties and making informed decisions to protect organizations from potential harm or loss. Risk management is a critical component of effective decision-making and essential for the long-term success and sustainability of businesses and industries.

In today’s era, risk management strategies are increasingly influenced by the dig ital transformation of businesses. The rise of cyber risks, data privacy concerns, and the need for digital resilience are reshaping the risk landscape. Organizations are adopting digital tools and analytics, not only to comply with technological advancements but also to predict and mitigate risks more effectively.

We’ll explore the importance of risk management and how to implement an effective plan in the contemporary business landscape, especially from a strategic executive perspective.

• What types of risks are there?

Importance of risk management

Risk management process.

• Enterprise risk management (ERM)

How to create an effective risk management plan

Embrace a culture of continuous learning and adaptation in risk management, types of risks.

In the business realm, myriad risks are categorized based on their nature and source. Here’s an insight into some types of risks:

• Operational risk . Arises from internal processes, people, and systems.
• Financial risk . Related to financial operations and transactions.
• Strategic risk. Stems from business strategies and industry changes.
• Compliance risk. Due to legal and regulatory requirements.
• Reputational risk. Impacts public perception and brand reputation.
• Market risk. From market dynamics like price and demand fluctuations.
• Credit risk. Due to potential default on financial obligations.
• Technology risk. Such as cybersecurity threats and system failures.

Understanding these risks is the steppingstone to developing a robust risk management framework, ensuring business longevity amidst a landscape of uncertainties.

Risk management plays a vital role in various industries, as it helps organizations anticipate and address potential threats and uncertainties. By proactively managing risks, businesses can minimize financial losses, protect their reputation, and ensure the safety and well-being of their employees and stakeholders. 

Moreover, risk management enables organizations to seize opportunities and make informed decisions, leading to improved performance and competitive advantage. 

IMD’s Boards and Risks program provides board members with the opportunity to hone their risk oversight capabilities and ensure they’re well-equipped to guide their organizations through the complex landscape of contemporary business risks.

• Finance. In the financial sector, risk management is crucial for banks, insurance companies, and investment firms. These institutions face a wide range of risks, including credit risk, market risk, operational risk, and liquidity risk. Effective risk management practices in the financial industry help ensure stability and prevent financial crises, as demonstrated by the global financial crisis of 2008 .
• Health care. The health care industry relies heavily on risk management to ensure patient safety and quality of care. Health care organizations face risks related to medical errors, patient privacy breaches, and regulatory compliance. By implementing robust risk management strategies, providers can identify and mitigate potential risks, leading to improved patient outcomes and reduced legal liabilities.
• Project management. Risk management is equally important in project management, where uncertainties and potential risks can significantly impact project success. By incorporating risk management into project planning and execution, project managers can identify potential obstacles, allocate resources effectively, and implement contingency plans to minimize project delays and cost overruns.
• Information technology. Information technology (IT) is another sector where risk management is of utmost importance. With the increasing reliance on digital systems and the rise of cyberthreats , organizations must implement robust risk management practices to protect sensitive data, maintain system integrity, and ensure business continuity. Cybersecurity risks, such as data breaches and malware attacks, can have severe consequences, including financial losses and reputational damage.
• Supply chain management. Supply chain management is yet another area where effective risk management is critical. Supply chains are vulnerable to various risks, such as disruptions in logistics, supplier failures, and natural disasters. By implementing risk management strategies, organizations can identify potential vulnerabilities, establish alternative supply sources, and develop contingency plans to minimize the impact of supply chain disruptions.

The risk management process is a structured approach that enables organizations to identify, assess, mitigate, and monitor risks. Implementing a thorough risk management process is crucial for understanding and preparing for the potential risks that come with operating in any industry. 

Adopting standard risk management practices, like those outlined by the International Organization for Standardization (ISO), can benefit businesses by providing a framework to manage risks effectively. 

Risk identification

Risk identification is the initial step in the risk management process. It involves recognizing and listing all possible risks that might affect the organization, whether they’re operational, financial, technological, reputational, or otherwise. For example, a retail company might identify the risk of data breaches that could potentially expose sensitive customer information.

Various tools and techniques can be used for risk identification including SWOT analysis, historical data analysis, stakeholder interviews, and expert consultations.

Risk assessment

Once risks have been identified, the next step is to assess them based on their likelihood of occurrence and the potential impact they could have on the organization. 

As an example, a financial institution might assess the potential financial and reputational impact of fraud risks and determine the likelihood of occurrence is high due to inadequate fraud detection systems.

Risk assessment allows for a better understanding of the risks and aids in prioritizing them. This stage often involves the creation of a risk matrix and a risk register to visualize the severity and priority of each risk.

Alongside traditional methods, a data-driven approach is revolutionizing risk assessment. Advanced data analytics, AI, and machine learning are now pivotal tools in identifying and evaluating risks. 

These technologies enable organizations to process vast amounts of data, recognize patterns, and predict potential risks with unprecedented accuracy. By leveraging these tools, businesses can gain deeper insights into potential threats, leading to more informed decision-making.

Risk mitigation

Risk mitigation involves developing and implementing strategies to address the identified risks. The aim is to reduce the likelihood of the risks or lessen their impact should they occur. 

For example, a health care organization might implement stricter data security measures and train staff on cybersecurity best practices to mitigate the risk of cyberattacks .

Common risk mitigation strategies include risk avoidance, risk reduction, risk transfer, risk treatment, and implementing risk controls to ensure a balanced approach. It’s crucial to align mitigation strategies with organizational objectives to ensure a balanced approach.

Risk monitoring

Risk monitoring is the ongoing process of tracking and reviewing the identified risks and the effectiveness of the mitigation strategies put in place. Continuous monitoring ensures the organization is well-prepared to respond to changes in the risk profile over time. 

Effective risk monitoring includes regular reporting, reviewing, and updating the risk management plan to ensure it remains relevant and effective in the current business environment.

Enterprise risk management ( ERM )

Enterprise risk management (ERM) embodies a comprehensive approach to risk management that extends beyond traditional methods to encompass a broader range of business risks. 

Unlike conventional risk management, which may focus on isolated domains such as operational, financial, or technological risks, ERM integrates risks from various facets of a business and offers a unified view. This consolidated perspective is particularly beneficial for C-suite leaders and board members, as it facilitates strategic decision-making. 

By understanding the interdependencies and cumulative impact of different risks on overall business objectives, executives can align risk management with their strategic planning, enhancing their organization’s resilience and adaptability.

For example, consider how Apple has implemented ERM to manage its complex global operations. Apple’s ERM framework encompasses various risks, including supply chain disruptions, intellectual property issues, and market volatility. 

By integrating this broad range of risks, Apple can make strategic decisions that balance innovation with risk, such as diversifying its supplier base and investing in robust cybersecurity measures. This approach has helped Apple not only to mitigate risks but also to seize growth opportunities in the fast-evolving tech industry.

This comprehensive analysis and assessment of potential risks aid in devising robust business continuity plans, ensuring the organization remains operational and continues to meet its objectives even in the face of adversities.

For example, a hospital system implementing ERM could identify potential risks related to natural disasters and infectious disease outbreaks. By aligning its ERM findings with its business continuity plans, the hospital is better prepared to maintain operations during a pandemic and provide continuous care for patients.

Furthermore, ERM contributes to achieving business benchmarks by fostering a culture of informed decision-making. Identifying and analyzing risk events in a structured manner provides valuable insights that aid in setting realistic and attainable benchmarks. 

It also offers a clear pathway for monitoring progress toward achieving these benchmarks and makes sure the risk management initiatives are aligned with overall business success.  An illustration of these benefits can be seen in a financial services firm employing ERM to align its risk management strategies with its business benchmarks in customer satisfaction, regulatory compliance, and financial performance. Through continuous monitoring and adjustment of its risk management practices, the firm can achieve and exceed its set benchmarks, showcasing the value of a holistic risk management approach.

Creating an effective risk management plan is pivotal for business leaders who want to safeguard the organization against unforeseen adversities. Here’s a step-by-step guide to aid leaders in developing a robust plan.

1. Identify risks

Begin with a thorough identification process to list down all possible risks that could affect your organization. Use tools like SWOT analysis, brainstorming sessions, and historical data analysis to uncover potential risks. Engage different departments to ensure a comprehensive identification process.

2. Assess risks

Assess the identified risks based on their likelihood and potential impact on the organization. Utilize risk assessment matrices to prioritize risks and understand their implications better. This step should provide a clear insight into which risks need immediate attention.

3. Develop mitigation strategies

Formulate strategies aimed at mitigating risks and the impact of identified risks. Each strategy should correspond to a specific risk and might range from risk avoidance to risk acceptance. Additionally, consider investing in insurance policies to transfer certain risks.

4. Allocate resources

Allocate necessary resources like finances, personnel, and technology to support the implementation of your risk mitigation strategies. Ensure there are clear budgets and responsible persons assigned to each strategy.

5. Communicate and train

Communicate the risk management plan to all stakeholders and train relevant personnel on their roles within the plan. Effective communication and training ensure everyone is aligned and equipped to manage risks effectively.

6. Implement the plan

Put the plan into action by implementing the formulated risk mitigation strategies. Monitor the implementation process to confirm it aligns with the plan, and make adjustments as necessary to address any challenges that arise.

7. Monitor and review

Continuously monitor the effectiveness of the risk management plan and the evolving risk landscape. Regular reviews help identify any gaps in the plan, so leaders can make necessary updates..

8. Establish a feedback loop

Create a feedback mechanism to gather insights from the implementation process. Encourage stakeholders to report on the effectiveness of risk mitigation strategies, and use this feedback to improve the response plan.

9. Consult experts

Engage risk management experts or enroll in specialized programs like IMD’s Boards and Risks program , which can help board members upgrade their risk oversight capabilities by offering a structured approach toward understanding and managing various business risks

10. Foster continuous improvement

Promote a culture of continuous improvement by learning from the successes and failures of the risk management process. Analyze performance data, stay updated on evolving best practices, and strive for continuous enhancement of your risk management plan to ensure it remains robust and relevant.

Throughout this exploration, we’ve underscored the pivotal role of risk management in steering organizations through the myriad of uncertainties inherent in today’s business landscape. 

From understanding the risk management process to the broader perspective offered by enterprise risk management (ERM), the journey toward effective risk governance is both a necessity and an opportunity for organizational resilience and sustainable success.

As the business ecosystem evolves, embracing a culture of continuous learning and adaptation in risk management is imperative. Engage with IMD’s Board at Risk learning journey to further enhance your risk management acumen and prepare your organization to not only withstand adversities but to thrive amidst them.

To quote O. Sarl Simonton, “In the face of uncertainty, there is nothing wrong with hope.” Coupling hope with a robust risk management strategy is the blueprint for enduring success in an unpredictable world.

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What Does a Business Continuity Plan Typically Include?

Phyllis Drucker

• June 4, 2024
• Reading Time: 6 minutes

Technical failures are no longer an option in a business environment that relies on technology for everything, including the revenue stream. Still, business continuity requires more than securing technology from disasters. Unlike disaster recovery planning, business continuity plans involve more than recovering IT systems and their data. Instead, a good BCP will address common business risks and ensure a response that stabilizes business operations, including technology and other factors. So, to create a solid strategy we need to answer the question what does a business continuity plan typically include?

Table of Contents

Introduction

Business continuity plans help manage the risks businesses face from interruptions due to natural and man-made disasters, cyberattacks, and pandemics. Their goal is to manage risks affecting all areas of business operations.

Due to the complexity of developing, documenting, and testing a plan of this scale, their complexity often leads to organizations failing to plan.

This article simplifies what’s in a typical business continuity plan.

What Is Business Continuity Planning (BCP)?

Business continuity planning (BCP) ensures key business functions continue during disruptions, minimizing downtime and financial losses. This includes identifying threats, assessing risks, and preparing mitigation strategies. An essential step is a risk assessment to pinpoint potential interruptions, helping organizations grasp their risks and plan ways to handle them effectively.

Business continuity plans typically include elements essential for ensuring the continuity of critical business functions during and after a service interruption. These elements encompass operational (non-technical) and technical aspects of the organization’s day-to-day activities.

Business continuity plans evaluate risks, developing and then document mitigation and communication strategies for data backup, disaster recovery, cybersecurity, and facility damage by including the following key items:

• Risk assessment: Identifying and documenting potential threats and risks that could disrupt business operations, such as natural disasters, cyber-attacks, or supply chain interruptions.
• Business impact analysis and recovery objectives: Determine and document the impact of disruptions on key business processes, set recovery objectives to prioritize service restoration, minimize downtime, and minimize financial losses.
• Business continuity strategies: Establish backup procedures or remote work protocols to ensure that strategic business operations can continue during and after disruption.
• Crisis management and communication plans: Provide instruction on responding to crises, including clear communication plans to keep employees, stakeholders, and customers informed during a disruption.
• Documentation of the business continuity plan: Creating manuals that include procedures, contact information, and recovery strategies is essential to ensure a quick and effective response during a crisis.
• Training and awareness: Help employees understand their roles and responsibilities during a crisis and raise awareness about the importance of business continuity planning throughout the organization.
• Regular review and updates: Testing and review are critical to ensuring the business continuity plan reflects changes in the business environment, technology, or financial risks and remains effective and relevant.

Structuring the Business Continuity Team

A business continuity plan involves various stakeholders for successful implementation. The structure of the continuity team is vital for effective coordination.

Chief Risk Officer’s Responsibilities

The Chief Risk Officer (CRO) plays a vital role in business continuity planning and risk management. Their responsibilities include:

• Conducting risk assessments and collaborating with senior management to integrate risk management into the organization’s overall strategy.
• Developing strategies for mitigation and preparedness to ensure the continuity of critical business functions.
• Monitoring and evaluating the effectiveness of risk management measures.
• Keeping senior management informed about potential risks and recommending appropriate actions.
• Ensuring compliance with regulatory requirements related to risk management.

The CRO’s expertise and leadership are essential for establishing a robust business continuity plan that addresses the organization’s risks and ensures the continuity of critical business functions.

Business Continuity Manager’s Role

The Business Continuity Manager is responsible for the day-to-day management of the business continuity plan, including:

• Overseeing the development and implementation of the business continuity plan.
• Conducting regular assessments to identify vulnerabilities and improvements in the plan.
• Coordinating with various departments and stakeholders to ensure the plan’s effectiveness.
• Developing proactive measures to mitigate risks and ensure the continuity of critical business functions.
• Training and educating employees on their roles and responsibilities during a disruption.
• Conducting drills and simulations to test the plan’s effectiveness and identify areas for improvement.
• Maintaining documentation and records related to the business continuity plan.

Human Resources Role in Business Continuity

Human Resources (HR) is crucial in operationalizing a business continuity plan. They are responsible for ensuring all staff members know the plan and their roles during disruption and are cared for in the event of an emergency when they are on-site.

Facilities Management Role

Facilities Management manages the physical infrastructure, facilities, and equipment that support the organization’s operations. Their key business continuity planning responsibilities include:

• Collaborating with suppliers and partners to identify and address potential risks and disruptions in the supply chain.
• Regularly inspecting and maintaining facilities and equipment to minimize the risk of disruptions.
• Developing and implementing plans for responding to and recovering from disasters that may affect the organization’s facilities and operations.

Developing Critical Business Continuity Strategies

Developing effective business continuity strategies ensures critical business functions continue during disruptions. Two critical strategies include IT disaster recovery plans and crisis communication plans.

Downtime Mitigation with an IT Disaster Recovery Plan

The IT Disaster Recovery Plan focuses on IT system and data recovery post-disaster, incorporating data backup, recovery strategies, and data protection to ensure quick operation restoration.

Key elements of an effective IT disaster recovery plan include:

• Data backup: Frequent backups of all critical business data with off-site storage.
• Recovery Strategies and Redundancy: Strategic decisions and procedures for restoring IT operations or establishing redundant systems and failover mechanisms to ensure continuous IT operations .
• Data protection: Implementing measures to protect sensitive information from loss or unauthorized access.
• Testing and validation: Regularly testing the IT disaster recovery plan to identify weaknesses and ensure effectiveness.
• Documentation: Maintaining detailed documentation of IT systems, recovery procedures, and contact information for internal and external partners.

Crisis Communication Plans for Effective Business Operations

Crisis communication plans outline how the organization will communicate with internal and external stakeholders, ensuring timely and accurate information flow. An effective crisis communication plan includes the following:

• Identifying individuals representing the organization and communicating with internal and external stakeholders.
• Determining the appropriate communication channels , such as email, phone, or messaging platforms.
• Procedures for handling employee notification , including their roles and necessary safety measures.
• Protocols for communicating with external stakeholders , such as customers, suppliers, regulatory bodies, and the public.
• Templates and guidelines for crisis communications to ensure consistent and effective messaging.
• Employee training and drills to help them understand their roles and responsibilities.

Continuous Improvement and Audit Compliance

Continuous improvement and auditing compliance are vital in business continuity planning. Organizations must regularly assess compliance and enhance their plans to meet standards and regulations.

Over time, as operational resilience is ensured through regular updates to address emerging threats and changes, conducting audits helps ensure compliance and identifies areas for enhancement.

Aligning with International Standards

Aligning with an international standard makes it easier for organizations to engage in business continuity planning by providing a framework they can use in their planning process. Standards can help organizations develop a robust business continuity plan that ensures the organization’s ability to continue operations during and after disruptions.

The ISO 22301 Standard for Business Continuity Plan

ISO 22301 is an international standard that provides a framework for establishing, implementing, and maintaining a business continuity management system (BCMS).

The key components of ISO 22301 include many of the items addressed in this article:

• Leadership commitment
• Risk assessment and treatment
• Business impact analysis
• Business continuity strategies
• Incident response and recovery
• Testing and exercises
• Performance evaluation
• Continuous improvement

Updating Backup Plans to Address Emerging Threats

Business continuity plans must be regularly updated to address emerging threats and vulnerabilities. Risks and disruptions can evolve over time, and organizations must adapt their plans to ensure their continued effectiveness.

Regular updates to the business continuity plan involve:

• Identifying emerging threats:
• Updating risk assessments
• Developing response strategies
• Implementing proactive measures
• Regular plan reviews

The Business Value of Good BCDR Planning

Understanding the nuances between business continuity planning and disaster recovery ensures that organizations are ready when a problem strikes.

IT is familiar with and works towards ensuring system availability through disaster recovery, but often, their business partners fail to plan accordingly. By ensuring a business continuity plan is in place and able to be executed, business executives secure the revenue stream and future of the organization.

A well-thought-out business continuity plan is essential for mitigating risks and ensuring resilience in unexpected disruptions.

Businesses can proactively address challenges and maintain operational continuity by incorporating key elements such as risk assessment, crisis communication strategies, and IT disaster recovery plans.

Structuring a dedicated team, aligning with industry standards like ISO 22301, and continually updating plans to address emerging threats is crucial for effective business continuity management.

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5 Steps to Creating a Climate Mitigation Strategy

• 04 Jun 2024

In October 2021, the United Nations (U.N.) held a global climate change conference (COP26) where over 5,200 businesses pledged to meet net-zero carbon targets by 2050. Yet, only 18 percent of CEOs reported having the clarity to operate their firms in line with the 1.5 degree Celsius warming trajectory.

As a business leader, it can be difficult to know where to start and how to make an impact on such a far-reaching, pressing issue.

“It may be easy for managers to fall into the trap of thinking that one business’s impact isn’t big enough to be worth doing,” says Harvard Business School Professor Forest Reinhardt, who teaches the online course Business and Climate Change alongside HBS Professor Michael Toffel, “or taking the perspective that it’s someone else’s responsibility to act—the government should take care of it, or consumers need to drive demand. But the lesson all business leaders can take from this course is that every firm can have an impact.”

To help you get started, here’s a primer on climate change and five steps to creating an actionable climate change mitigation strategy.

Related: Listen to Professor Reinhardt discuss climate change and the tragedy of the commons on The Parlor Room podcast , or watch the episode on YouTube .

What Is Climate Change?

Climate change refers to long-term shifts in temperature and weather patterns. Although some changes in Earth’s climate are natural, most are anthropogenic —or caused by humans.

Human activity has disrupted Earth’s natural regulatory systems—namely, the greenhouse effect, carbon cycle, and water cycle—by emitting more greenhouse gas into the atmosphere than can be naturally absorbed.

The four naturally occurring greenhouse gases are:

• Carbon dioxide (CO 2 )
• Methane (CH 4 )
• Nitrous oxide (N 2 O)
• Water vapor (H 2 O) 2

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Ways in which humans—and businesses in particular—generate excess greenhouse gases include:

• Burning fossil fuels to generate electricity
• Producing cement, steel, and iron for construction
• Waste management, such as landfills and trash incinerators
• Transportation, including cars, trucks, planes, trains, and ships
• Clearing land for agriculture
• Raising livestock
• Industrial processes like refrigeration and air conditioning

Because of these processes, businesses have a major impact on climate change and its effects, including higher average global temperatures and extreme weather events like storms, heat waves, temperature fluctuations, and rising sea levels, which cause flooding.

“Climate change is one of the world’s biggest societal challenges,” Reinhardt says in Business and Climate Change . “Companies will have to play an active role if we, as a society, are to have any realistic hope of managing the challenges presented by climate change.”

Related: How Climate Change Affects Business Strategy

5 Steps to Developing a Climate Change Mitigation Strategy

1. identify motivations.

The first step to creating a climate change mitigation strategy is addressing your motivations.

“Some firms mitigate in anticipation of potential regulations, such as energy efficiency standards, carbon pricing systems, or technology mandates and bans,” Toffel says in Business and Climate Change . “Preparing for pending regulatory requirements like this can ease a company’s transition to future regulation.”

Getting ahead of regulatory requirements can qualify your company to weigh in on the regulatory planning process and help reduce your risk of a difficult transition with enforced requirements.

Other motivations for climate mitigation include:

• Aligning with your company’s values and contributing to its culture
• Supporting recruiting and retention efforts to attract sustainably minded employees
• Bolstering brand voice
• Encouraging engagement from customers who care about environmentally ethical consumption
• Labeling your brand as an industry leader

Listing your motivations before diving into the planning process can provide a guiding purpose throughout your efforts.

Related: Making the Business Case for Sustainability

2. Measure a Baseline Carbon Footprint

Carbon footprint is a term used to describe the total amount of greenhouse gas emissions—typically measured in metric tons—associated with an individual, a company, or a product. It can either measure carbon dioxide emissions or carbon dioxide equivalent , which aggregates all greenhouse gas emissions into one metric.

Identify Emissions Sources

To measure your organization’s baseline carbon footprint, start by identifying its emissions sources. In Business and Climate Change , Toffel explains the categorization method the Greenhouse Gas Protocol—a standardized global framework—presents:

• Scope 1: Emissions produced onsite by sources your company owns or controls
• Scope 2: Emissions generated offsite to create electricity, steam, and heating and cooling energy
• Scope 3 Upstream emissions are those associated with a product’s supply chain
• Scope 3 Downstream emissions result from post-manufacturing activities, including distribution, use, and disposal

Conduct a Life Cycle Assessment

If calculating a specific product’s carbon footprint, you can conduct a Life Cycle Assessment to visualize emissions sources at each of its five life stages:

• Sourcing: Where do the raw materials come from?
• Manufacturing: What processes do you use to make the product?
• Distribution: How do you disseminate the product to retailers and end users?
• Use: What’s involved in the processes of using the product?
• End-of-life: What happens to the product when you’re done using it?

Gather Data and Calculate Your Carbon Footprint

Next, gather emissions data.

“While identifying emissions sources and establishing the boundaries of measurement is important, it’s just the start of assessing a carbon footprint,” Toffel says in Business and Climate Change.

Inventory how much greenhouse gas each emissions source discharged over a set timeframe. Next, convert each into its carbon dioxide equivalent using its emissions factor , a numeric estimate of the quantity of greenhouse gas emissions a process or an activity produced.

Multiply the emissions amount by the emissions factor to calculate the carbon dioxide equivalent for the period. Finally, add up the carbon dioxide equivalents for each emissions source to determine your company’s carbon footprint.

3. Analyze Mitigation Options

After calculating your organization’s carbon footprint, identify and analyze your mitigation options.

Brainstorm how to replace the identified emissions sources with lower- or no-emission alternatives. Welcome innovative ideas , as climate mitigation is still a relatively young field. You can also hire a sustainability consultant for guidance on feasible options.

Once you have a list of mitigation options, analyze them using a marginal abatement cost curve.

“A marginal abatement cost curve enables managers to compare projects in terms of cost-effectiveness and effect on emissions reduction,” Reinhardt says in Business in Climate Change.

Using the tool, prioritize projects based on which will have the biggest impact on emissions reduction and be most cost-effective. It’s not always the case that the most expensive options provide the largest emissions reduction. Keep in mind that some climate change mitigation activities are government-subsidized, making them less costly to pursue.

4. Set Emissions Reduction Targets

Once you’ve decided which mitigation project to pursue, set clear goals . How will you determine success and measure progress?

According to Business and Climate Change , three popular types of mitigation targets are:

• Percentage reduction targets: Set a goal to reduce greenhouse gas emissions by some percentage by a target year relative to a baseline year
• Net zero targets: Commit to reducing greenhouse gas emissions to as close to zero as possible and then completely offset any remaining emissions by purchasing carbon credits
• Science-based targets: Set science-based targets per the Science Based Targets Initiative (SBTi) that align with the Paris Agreement’s goal to limit temperature rise to 1.5 degrees Celsius (2.7 degrees Fahrenheit) above pre-industrial levels

No matter your target, setting it requires four elements:

• Activity scope: What projects and activities does it include?
• Baseline year: What timeframe will you compare the target carbon footprint against?
• Target year: What date will you achieve it by? Do you have shorter-term milestones?
• Target value and type: What’s the numeric metric you aim to achieve? For example, “reduce carbon dioxide equivalent by 50 percent” or “reduce carbon dioxide equivalent by 10 metric tons per square meter of land.”

5. Implement Mitigation Activities

Finally, implement your prioritized mitigation activities. Track progress toward your target and ensure you hit the necessary milestones along the way.

If your original strategy doesn’t yield your anticipated results, don’t be afraid to reevaluate and pivot.

“The mitigation planning process isn’t really linear,” Toffel says in Business and Climate Change. “Instead, it can be viewed as a continuous improvement process with iterations of measuring, analyzing, implementing, and evaluating mitigation activities.”

Gain the Knowledge to Enact Change

As you approach your climate change mitigation journey, remember that there’s always more to learn. By enrolling in a course like Business and Climate Change , you can gain the scientific foundation—as well as the tools and nuances—to inform your strategy for navigating this global challenge.

You can also learn directly from business leaders who’ve faced climate change firsthand and use their experiences to shape your organization’s mitigation efforts.

With the right motivations, targets, and baseline, you can help mitigate climate change’s effects.

Do you want to learn more about adapting to and mitigating climate change? Explore Business and Climate Change —one of our online business in society courses —and download our free e-book on how to become a purpose-driven, global business professional.

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AI Risk Assessment: A Framework for Thinking through Risk Considerations

Generative ai in our lives.

No one will argue that AI is here to stay. It has enhanced our everyday lives as well as our business processes. Whether it’s voice-assisted smart phones, handwriting recognition, financial trading, spam filtering, language translation, or a myriad of other tasks that have been automated and streamlined, AI impacts our lives daily. And with the innovation of generative AI, this technology is rapidly evolving.

As businesses strive to meet evolving customer expectations, innovative technology is often the first stop on the road to success. However, the advancements in generative AI technology bring about challenges and risks which need consideration. Let’s look at how you can think through your AI risk assessment, across a diverse ecosystem to ensure optimization of AI technology and responsible use. By approaching generative AI with a more holistic view of risk, it allows you to balance both people and generative AI to address challenges, create impact, and innovate meaningfully.

Primary Risk Types

There are seven primary risk types that any business needs to take into consideration:

• Brand/business
• Customer experience
• Ethical considerations
• Data privacy transparency & explainability
• Algorithmic bias mitigation
• AI & data governance
• Other – a group of miscellaneous items that will continue to grow

Each of these areas bring unique considerations and should be approached thoughtfully. By examining the entire risk portfolio, businesses can meet challenges head on, plan, and avoid pitfalls.

Brand/Business

Regardless of the technology being used, it’s important for your company’s brand be protected. The first consideration for any brand is complying with legal and governance. Adhering to larger regulation and governance (present and future) as well as following industry specific rules and requirements is a key element in ensuring proper use of generative AI technology.

Consistency in brand application is next on the list. Regardless of the channel your customers are engaging, your brand needs to remain consistent across all touchpoints. Website, content, digital channels, social media—anywhere a customer or the market will meet your business—the values of the business and brand must be consistent.

Another consideration in protecting your brand and business is preventing bad actors. Mitigating things like spam, content stuffing, corrupt AI, fraudulent attacks, and more for security internally and externally. Any one of these pitfalls can disrupt your business and damage your brand.

Customer Experience

Customers are the heart of any business—and customer expectations are continually evolving with technologies and processes. Companies need to be able to strike a balance between being efficient and providing a quality engagement with customers. Minimizing customer churn due to service/support inefficiencies and creating a faster path to value without sacrificing quality of output is what we call operating efficiently with quality.

People-first service ensures the technology you use leverages unique customer data to provide faster and more custom support experiences across help chats, service centers, and more. Personalizing customer interactions using generative AI and the data you’re already collecting builds a connection between your brand and your customers. Customers feel seen and heard and are more likely to return.

Ethical Considerations

When it comes to customer data and technology, protecting data privacy and PII goes hand-in-hand. Your AI risk assessment must include protecting sensitive data and ensuring proper security during collection, storage, and usage of data. It’s crucial to maintaining your brand reputation and customer base.

In alignment with privacy and PII is making sure your generative AI solutions uphold ethics. Ensuring that inputs and outputs align with ethical standards to limit bias, adhere to obligations, and maintain your corporate values will convey your company’s integrity and trustworthiness, so your brand shines in a positive light.

Data Privacy Transparency & Explainability

Ensuring customers understand your data privacy practices and are aware of not only how you handle their data, but also where they may be interacting with generative AI technology is critical in today’s fast-paced digital world. Personal information is exchanged at a rapid rate and making sure your customers feel safe is critical to maintaining a long relationship with them.

You should be transparent with customers, ensuring they know how their data is collected, utilized, and shared by an organization. These practices should be well documented for customers to access.

To ensure trust, accountability, and compliance, it’s important that stakeholders within your organization understand the AI processes and how those technologies reach their outcomes. This helps decisions-makers have clear justifications for their technology and process recommendations. Being able to properly communicate this is called explainability within data privacy and is crucial to ensure privacy rights and trust.

Algorithmic Bias Mitigation

Algorithmic bias mitigation involves implementing strategies to reduce biases present in AI algorithms. These biases may come from various sources, such as historical data or cultural stereotypes. Mitigation typically includes steps like identifying biases, assessing their impact, and implementing measures to address them. This can involve preprocessing data and responses to remove biases, adjusting algorithms for fairness across different groups, or ensuring transparency and accountability in decision-making. Ongoing human monitoring and machine learning is essential to maintain fairness over time. By actively mitigating biases, organizations can promote fairness and equity, leading to more inclusive outcomes.

AI & Data Governance

AI governance ensures that businesses deploy AI technologies responsibly and ethically. It involves developing a framework with principles, guidelines, technology controls, and regulations that address issues such as fairness, accountability, transparency, and privacy. One of the core AI technologies is large language models (LLMs), which have the capability of processing vast amounts of data, putting it in context, personalizing it, and providing answers to questions or resolution to problems in natural language.

Businesses need a programmatic approach to LLMs and data management that includes data quality, LLM quality, standards, bias mitigation, procedures, ethical use of AI, transparency, and metrics covering the entire AI life cycle. This will not only enhance LLM and data quality and security, but also ensure your data is primed for applying advanced analytics to help you accelerate decision-making while reducing risk.

Other Considerations

There are some final elements that need to be thought through to ensure your generative AI solution not only makes a positive impact on your business, but does so in a way that mitigates risks. Proper sourcing and citing is a key consideration. Attributing works and adhering to copyrights, etc. prevents legal infringement, plagiarism, and more. Minimizing errors, removing false information, and preventing bad data to have inputs and outputs that are true and correct will ensure accuracy.

And finally, those things that are yet to be discovered. Generative AI technology will continue to evolve and grow. We cannot identify all areas of potential future risk. So, you must be vigilant, continually reevaluating your AI risk assessment to identify where generative AI may pose risks to your customers, employees, processes, and business.

Learn how Concentrix innovates with generative AI , and how we can help uncover your biggest areas of risk, process gaps, and advise on the best solutions to address each problem.

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How To Start A Business In 11 Steps (2024 Guide)

Updated: Apr 7, 2024, 1:44pm

Table of Contents

Before you begin: get in the right mindset, 1. determine your business concept, 2. research your competitors and market, 3. create your business plan, 4. choose your business structure, 5. register your business and get licenses, 6. get your finances in order, 7. fund your business, 8. apply for business insurance, 9. get the right business tools, 10. market your business, 11. scale your business, what are the best states to start a business, bottom line, frequently asked questions (faqs).

Starting a business is one of the most exciting and rewarding experiences you can have. But where do you begin? There are several ways to approach creating a business, along with many important considerations. To help take the guesswork out of the process and improve your chances of success, follow our comprehensive guide on how to start a business. We’ll walk you through each step of the process, from defining your business idea to registering, launching and growing your business.

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The public often hears about overnight successes because they make for a great headline. However, it’s rarely that simple—they don’t see the years of dreaming, building and positioning before a big public launch. For this reason, remember to focus on your business journey and don’t measure your success against someone else’s.

Consistency Is Key

New business owners tend to feed off their motivation initially but get frustrated when that motivation wanes. This is why it’s essential to create habits and follow routines that power you through when motivation goes away.

Take the Next Step

Some business owners dive in headfirst without looking and make things up as they go along. Then, there are business owners who stay stuck in analysis paralysis and never start. Perhaps you’re a mixture of the two—and that’s right where you need to be. The best way to accomplish any business or personal goal is to write out every possible step it takes to achieve the goal. Then, order those steps by what needs to happen first. Some steps may take minutes while others take a long time. The point is to always take the next step.

Most business advice tells you to monetize what you love, but it misses two other very important elements: it needs to be profitable and something you’re good at. For example, you may love music, but how viable is your business idea if you’re not a great singer or songwriter? Maybe you love making soap and want to open a soap shop in your small town that already has three close by—it won’t be easy to corner the market when you’re creating the same product as other nearby stores.

If you don’t have a firm idea of what your business will entail, ask yourself the following questions:

• What do you love to do?
• What do you hate to do?
• Can you think of something that would make those things easier?
• What are you good at?
• What do others come to you for advice about?
• If you were given ten minutes to give a five-minute speech on any topic, what would it be?
• What’s something you’ve always wanted to do, but lacked resources for?

These questions can lead you to an idea for your business. If you already have an idea, they might help you expand it. Once you have your idea, measure it against whether you’re good at it and if it’s profitable.

Your business idea also doesn’t have to be the next Scrub Daddy or Squatty Potty. Instead, you can take an existing product and improve upon it. You can also sell a digital product so there’s little overhead.

What Kind of Business Should You Start?

Before you choose the type of business to start, there are some key things to consider:

• What type of funding do you have?
• How much time do you have to invest in your business?
• Do you prefer to work from home or at an office or workshop?
• What interests and passions do you have?
• Can you sell information (such as a course), rather than a product?
• What skills or expertise do you have?
• How fast do you need to scale your business?
• What kind of support do you have to start your business?
• Are you partnering with someone else?
• Does the franchise model make more sense to you?

Consider Popular Business Ideas

Not sure what business to start? Consider one of these popular business ideas:

• Start a Franchise
• Start a Blog
• Start an Online Store
• Start a Dropshipping Business
• Start a Cleaning Business
• Start a Bookkeeping Business
• Start a Clothing Business
• Start a Landscaping Business
• Start a Consulting Business
• Start a Photography Business
• Start a Vending Machine Business

Most entrepreneurs spend more time on their products than they do getting to know the competition. If you ever apply for outside funding, the potential lender or partner wants to know: what sets you (or your business idea) apart? If market analysis indicates your product or service is saturated in your area, see if you can think of a different approach. Take housekeeping, for example—rather than general cleaning services, you might specialize in homes with pets or focus on garage cleanups.

Primary Research

The first stage of any competition study is primary research, which entails obtaining data directly from potential customers rather than basing your conclusions on past data. You can use questionnaires, surveys and interviews to learn what consumers want. Surveying friends and family isn’t recommended unless they’re your target market. People who say they’d buy something and people who do are very different. The last thing you want is to take so much stock in what they say, create the product and flop when you try to sell it because all of the people who said they’d buy it don’t because the product isn’t something they’d buy.

Secondary Research

Utilize existing sources of information, such as census data, to gather information when you do secondary research. The current data may be studied, compiled and analyzed in various ways that are appropriate for your needs but it may not be as detailed as primary research.

Conduct a SWOT Analysis

SWOT stands for strengths, weaknesses, opportunities and threats. Conducting a SWOT analysis allows you to look at the facts about how your product or idea might perform if taken to market, and it can also help you make decisions about the direction of your idea. Your business idea might have some weaknesses that you hadn’t considered or there may be some opportunities to improve on a competitor’s product.

Asking pertinent questions during a SWOT analysis can help you identify and address weaknesses before they tank your new business.

A business plan is a dynamic document that serves as a roadmap for establishing a new business. This document makes it simple for potential investors, financial institutions and company management to understand and absorb. Even if you intend to self-finance, a business plan can help you flesh out your idea and spot potential problems. When writing a well-rounded business plan, include the following sections:

• Executive summary: The executive summary should be the first item in the business plan, but it should be written last. It describes the proposed new business and highlights the goals of the company and the methods to achieve them.
• Company description: The company description covers what problems your product or service solves and why your business or idea is best. For example, maybe your background is in molecular engineering, and you’ve used that background to create a new type of athletic wear—you have the proper credentials to make the best material.
• Market analysis: This section of the business plan analyzes how well a company is positioned against its competitors. The market analysis should include target market, segmentation analysis, market size, growth rate, trends and a competitive environment assessment.
• Organization and structure: Write about the type of business organization you expect, what risk management strategies you propose and who will staff the management team. What are their qualifications? Will your business be a single-member limited liability company (LLC) or a corporation ?
• Mission and goals: This section should contain a brief mission statement and detail what the business wishes to accomplish and the steps to get there. These goals should be SMART (specific, measurable, action-orientated, realistic and time-bound).
• Products or services: This section describes how your business will operate. It includes what products you’ll offer to consumers at the beginning of the business, how they compare to existing competitors, how much your products cost, who will be responsible for creating the products, how you’ll source materials and how much they cost to make.
• Background summary: This portion of the business plan is the most time-consuming to write. Compile and summarize any data, articles and research studies on trends that could positively and negatively affect your business or industry.
• Marketing plan: The marketing plan identifies the characteristics of your product or service, summarizes the SWOT analysis and analyzes competitors. It also discusses how you’ll promote your business, how much money will be spent on marketing and how long the campaign is expected to last.
• Financial plan: The financial plan is perhaps the core of the business plan because, without money, the business will not move forward. Include a proposed budget in your financial plan along with projected financial statements, such as an income statement, a balance sheet and a statement of cash flows. Usually, five years of projected financial statements are acceptable. This section is also where you should include your funding request if you’re looking for outside funding.

Learn more: Download our free simple business plan template .

Come Up With an Exit Strategy

An exit strategy is important for any business that is seeking funding because it outlines how you’ll sell the company or transfer ownership if you decide to retire or move on to other projects. An exit strategy also allows you to get the most value out of your business when it’s time to sell. There are a few different options for exiting a business, and the best option for you depends on your goals and circumstances.

The most common exit strategies are:

• Selling the business to another party
• Passing the business down to family members
• Liquidating the business assets
• Closing the doors and walking away

Develop a Scalable Business Model

As your small business grows, it’s important to have a scalable business model so that you can accommodate additional customers without incurring additional costs. A scalable business model is one that can be replicated easily to serve more customers without a significant increase in expenses.

Some common scalable business models are:

• Subscription-based businesses
• Businesses that sell digital products
• Franchise businesses
• Network marketing businesses

Start Planning for Taxes

One of the most important things to do when starting a small business is to start planning for taxes. Taxes can be complex, and there are several different types of taxes you may be liable for, including income tax, self-employment tax, sales tax and property tax. Depending on the type of business you’re operating, you may also be required to pay other taxes, such as payroll tax or unemployment tax.

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When structuring your business, it’s essential to consider how each structure impacts the amount of taxes you owe, daily operations and whether your personal assets are at risk.

An LLC limits your personal liability for business debts. LLCs can be owned by one or more people or companies and must include a registered agent . These owners are referred to as members.

• LLCs offer liability protection for the owners
• They’re one of the easiest business entities to set up
• You can have a single-member LLC
• You may be required to file additional paperwork with your state on a regular basis
• LLCs can’t issue stock
• You’ll need to pay annual filing fees to your state

Limited Liability Partnership (LLP)

An LLP is similar to an LLC but is typically used for licensed business professionals such as an attorney or accountant. These arrangements require a partnership agreement.

• Partners have limited liability for the debts and actions of the LLP
• LLPs are easy to form and don’t require much paperwork
• There’s no limit to the number of partners in an LLP
• Partners are required to actively take part in the business
• LLPs can’t issue stock
• All partners are personally liable for any malpractice claims against the business

Sole Proprietorship

If you start a solo business, you might consider a sole proprietorship . The company and the owner, for legal and tax purposes, are considered the same. The business owner assumes liability for the business. So, if the business fails, the owner is personally and financially responsible for all business debts.

• Sole proprietorships are easy to form
• There’s no need to file additional paperwork with your state
• You’re in complete control of the business
• You’re personally liable for all business debts
• It can be difficult to raise money for a sole proprietorship
• The business may have a limited lifespan

Corporation

A corporation limits your personal liability for business debts just as an LLC does. A corporation can be taxed as a C corporation (C-corp) or an S corporation (S-corp). S-corp status offers pass-through taxation to small corporations that meet certain IRS requirements. Larger companies and startups hoping to attract venture capital are usually taxed as C-corps.

• Corporations offer liability protection for the owners
• The life span of a corporation is not limited
• A corporation can have an unlimited number of shareholders
• Corporations are subject to double taxation
• They’re more expensive and complicated to set up than other business structures
• The shareholders may have limited liability

Before you decide on a business structure, discuss your situation with a small business accountant and possibly an attorney, as each business type has different tax treatments that could affect your bottom line.

Helpful Resources

• How To Set Up an LLC in 7 Steps
• How To Start a Sole Proprietorship
• How To Start a Corporation
• How To Start a Nonprofit
• How To Start a 501(c)(3)

There are several legal issues to address when starting a business after choosing the business structure. The following is a good checklist of items to consider when establishing your business:

Choose Your Business Name

Make it memorable but not too difficult. Choose the same domain name, if available, to establish your internet presence. A business name cannot be the same as another registered company in your state, nor can it infringe on another trademark or service mark that is already registered with the United States Patent and Trademark Office (USPTO).

Business Name vs. DBA

There are business names, and then there are fictitious business names known as “Doing Business As” or DBA. You may need to file a DBA if you’re operating under a name that’s different from the legal name of your business. For example, “Mike’s Bike Shop” is doing business as “Mike’s Bikes.” The legal name of the business is “Mike’s Bike Shop,” and “Mike’s Bikes” is the DBA.

You may need to file a DBA with your state, county or city government offices. The benefits of a DBA include:

• It can help you open a business bank account under your business name
• A DBA can be used as a “trade name” to brand your products or services
• A DBA can be used to get a business license

Register Your Business and Obtain an EIN

You’ll officially create a corporation, LLC or other business entity by filing forms with your state’s business agency―usually the Secretary of State. As part of this process, you’ll need to choose a registered agent to accept legal documents on behalf of your business. You’ll also pay a filing fee. The state will send you a certificate that you can use to apply for licenses, a tax identification number (TIN) and business bank accounts.

Next, apply for an employer identification number (EIN) . All businesses, other than sole proprietorships with no employees, must have a federal employer identification number. Submit your application to the IRS and you’ll typically receive your number in minutes.

Get Appropriate Licenses and Permits

Legal requirements are determined by your industry and jurisdiction. Most businesses need a mixture of local, state and federal licenses to operate. Check with your local government office (and even an attorney) for licensing information tailored to your area.

• Best LLC Services
• How To Register a Business Name
• How To Register a DBA
• How To Get an EIN for an LLC
• How To Get a Business License

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Open a Business Bank Account

Keep your business and personal finances separate. Here’s how to choose a business checking account —and why separate business accounts are essential. When you open a business bank account, you’ll need to provide your business name and your business tax identification number (EIN). This business bank account can be used for your business transactions, such as paying suppliers or invoicing customers. Most times, a bank will require a separate business bank account to issue a business loan or line of credit.

Hire a Bookkeeper or Get Accounting Software

If you sell a product, you need an inventory function in your accounting software to manage and track inventory. The software should have ledger and journal entries and the ability to generate financial statements.

Some software programs double as bookkeeping tools. These often include features such as check writing and managing receivables and payables. You can also use this software to track your income and expenses, generate invoices, run reports and calculate taxes.

There are many bookkeeping services available that can do all of this for you, and more. These services can be accessed online from any computer or mobile device and often include features such as bank reconciliation and invoicing. Check out the best accounting software for small business, or see if you want to handle the bookkeeping yourself.

Determine Your Break-Even Point

Before you fund your business, you must get an idea of your startup costs. To determine these, make a list of all the physical supplies you need, estimate the cost of any professional services you will require, determine the price of any licenses or permits required to operate and calculate the cost of office space or other real estate. Add in the costs of payroll and benefits, if applicable.

Businesses can take years to turn a profit, so it’s better to overestimate the startup costs and have too much money than too little. Many experts recommend having enough cash on hand to cover six months of operating expenses.

When you know how much you need to get started with your business, you need to know the point at which your business makes money. This figure is your break-even point.

In contrast, the contribution margin = total sales revenue – cost to make product

For example, let’s say you’re starting a small business that sells miniature birdhouses for fairy gardens. You have determined that it will cost you $500 in startup costs. Your variable costs are $0.40 per birdhouse produced, and you sell them for $1.50 each.

Let’s write these out so it’s easy to follow:

This means that you need to sell at least 456 units just to cover your costs. If you can sell more than 456 units in your first month, you will make a profit.

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There are many different ways to fund your business—some require considerable effort, while others are easier to obtain. Two categories of funding exist: internal and external.

Internal funding includes:

• Personal savings
• Credit cards
• Funds from friends and family

If you finance the business with your own funds or with credit cards, you have to pay the debt on the credit cards and you’ve lost a chunk of your wealth if the business fails. By allowing your family members or friends to invest in your business, you are risking hard feelings and strained relationships if the company goes under. Business owners who want to minimize these risks may consider external funding.

External funding includes:

• Small business loans
• Small business grants
• Angel investors
• Venture capital
• Crowdfunding

Small businesses may have to use a combination of several sources of capital. Consider how much money is needed, how long it will take before the company can repay it and how risk-tolerant you are. No matter which source you use, plan for profit. It’s far better to take home six figures than make seven figures and only keep $80,000 of it.

Funding ideas include:

• Invoice factoring: With invoice factoring , you can sell your unpaid invoices to a third party at a discount.
• Business lines of credit: Apply for a business line of credit , which is similar to a personal line of credit. The credit limit and interest rate will be based on your business’s revenue, credit score and financial history.
• Equipment financing: If you need to purchase expensive equipment for your business, you can finance it with a loan or lease.
• Small Business Administration (SBA) microloans: Microloans are up to $50,000 loans that can be used for working capital, inventory or supplies and machinery or equipment.
• Grants: The federal government offers grants for businesses that promote innovation, export growth or are located in historically disadvantaged areas. You can also find grants through local and regional organizations.
• Crowdfunding: With crowdfunding , you can raise money from a large group of people by soliciting donations or selling equity in your company.

Choose the right funding source for your business by considering the amount of money you need, the time frame for repayment and your tolerance for risk.

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You need to have insurance for your business , even if it’s a home-based business or you don’t have any employees. The type of insurance you need depends on your business model and what risks you face. You might need more than one type of policy, and you might need additional coverage as your business grows. In most states, workers’ compensation insurance is required by law if you have employees.

Work With an Agent To Get Insured

An insurance agent can help determine what coverages are appropriate for your business and find policies from insurers that offer the best rates. An independent insurance agent represents several different insurers, so they can shop around for the best rates and coverage options.

Basic Types of Business Insurance Coverage

• Liability insurance protects your business against third-party claims of bodily injury, property damage and personal injury such as defamation or false advertising.
• Property insurance covers the physical assets of your business, including your office space, equipment and inventory.
• Business interruption insurance pays for the loss of income if your business is forced to close temporarily due to a covered event such as a natural disaster.
• Product liability insurance protects against claims that your products caused bodily injury or property damage.
• Employee practices liability insurance covers claims from employees alleging discrimination, sexual harassment or other wrongful termination.
• Workers’ compensation insurance covers medical expenses and income replacement for employees who are injured on the job.
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Business tools can help make your life easier and make your business run more smoothly. The right tools can help you save time, automate tasks and make better decisions.

Consider the following tools in your arsenal:

• Accounting software : Track your business income and expenses, prepare financial statements and file taxes. Examples include QuickBooks and FreshBooks.
• Customer relationship management (CRM) software : This will help you manage your customer relationships, track sales and marketing data and automate tasks like customer service and follow-ups. Examples include Zoho CRM and monday.com.
• Project management software : Plan, execute and track projects. It can also be used to manage employee tasks and allocate resources. Examples include Airtable and ClickUp.
• Credit card processor : This will allow you to accept credit card payments from customers. Examples include Stripe and PayPal.
• Point of sale (POS) : A system that allows you to process customer payments. Some accounting software and CRM software have POS features built-in. Examples include Clover and Lightspeed.
• Virtual private network (VPN) : Provides a secure, private connection between your computer and the internet. This is important for businesses that handle sensitive data. Examples include NordVPN and ExpressVPN.
• Merchant services : When customers make a purchase, the money is deposited into your business account. You can also use merchant services to set up recurring billing or subscription payments. Examples include Square and Stripe.
• Email hosting : This allows you to create a professional email address with your own domain name. Examples include G Suite and Microsoft Office 365.

Many business owners spend so much money creating their products that there isn’t a marketing budget by the time they’ve launched. Alternatively, they’ve spent so much time developing the product that marketing is an afterthought.

Create a Website

Even if you’re a brick-and-mortar business, a web presence is essential. Creating a website doesn’t take long, either—you can have one done in as little as a weekend. You can make a standard informational website or an e-commerce site where you sell products online. If you sell products or services offline, include a page on your site where customers can find your locations and hours. Other pages to add include an “About Us” page, product or service pages, frequently asked questions (FAQs), a blog and contact information.

Optimize Your Site for SEO

After getting a website or e-commerce store, focus on optimizing it for search engines (SEO). This way, when a potential customer searches for specific keywords for your products, the search engine can point them to your site. SEO is a long-term strategy, so don’t expect a ton of traffic from search engines initially—even if you’re using all the right keywords.

Create Relevant Content

Provide quality digital content on your site that makes it easy for customers to find the correct answers to their questions. Content marketing ideas include videos, customer testimonials, blog posts and demos. Consider content marketing one of the most critical tasks on your daily to-do list. This is used in conjunction with posting on social media.

Get Listed in Online Directories

Customers use online directories like Yelp, Google My Business and Facebook to find local businesses. Some city halls and chambers of commerce have business directories too. Include your business in as many relevant directories as possible. You can also create listings for your business on specific directories that focus on your industry.

Develop a Social Media Strategy

Your potential customers are using social media every day—you need to be there too. Post content that’s interesting and relevant to your audience. Use social media to drive traffic back to your website where customers can learn more about what you do and buy your products or services.

You don’t necessarily need to be on every social media platform available. However, you should have a presence on Facebook and Instagram because they offer e-commerce features that allow you to sell directly from your social media accounts. Both of these platforms have free ad training to help you market your business.

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To scale your business, you need to grow your customer base and revenue. This can be done by expanding your marketing efforts, improving your product or service, collaborating with other creators or adding new products or services that complement what you already offer.

Think about ways you can automate or outsource certain tasks so you can focus on scaling the business. For example, if social media marketing is taking up too much of your time, consider using a platform such as Hootsuite to help you manage your accounts more efficiently. You can also consider outsourcing the time-consumer completely.

You can also use technology to automate certain business processes, including accounting, email marketing and lead generation. Doing this will give you more time to focus on other aspects of your business.

When scaling your business, it’s important to keep an eye on your finances and make sure you’re still profitable. If you’re not making enough money to cover your costs, you need to either reduce your expenses or find ways to increase your revenue.

Build a Team

As your business grows, you’ll need to delegate tasks and put together a team of people who can help you run the day-to-day operations. This might include hiring additional staff, contractors or freelancers.

Resources for building a team include:

• Hiring platforms: To find the right candidates, hiring platforms, such as Indeed and Glassdoor, can help you post job descriptions, screen résumés and conduct video interviews.
• Job boards: Job boards such as Craigslist and Indeed allow you to post open positions for free.
• Social media: You can also use social media platforms such as LinkedIn and Facebook to find potential employees.
• Freelance platforms: Using Upwork, Freelancer and Fiverr can help you find talented freelancers for one-time or short-term projects. You can also outsource certain tasks, such as customer service, social media marketing or bookkeeping.

You might also consider partnering with other businesses in your industry. For example, if you’re a wedding planner, you could partner with a florist, photographer, catering company or venue. This way, you can offer your customers a one-stop shop for all their wedding needs. Another example is an e-commerce store that partners with a fulfillment center. This type of partnership can help you save money on shipping and storage costs, and it can also help you get your products to your customers faster.

To find potential partnerships, search for businesses in your industry that complement what you do. For example, if you’re a web designer, you could partner with a digital marketing agency.

You can also search for businesses that serve the same target market as you but offer different products or services. For example, if you sell women’s clothing, you could partner with a jewelry store or a hair salon.

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To rank the best states to start a business in 2024, Forbes Advisor analyzed 18 key metrics across five categories to determine which states are the best and worst to start a business in. Our ranking takes into consideration factors that impact businesses and their ability to succeed, such as business costs, business climate, economy, workforce and financial accessibility in each state. Check out the full report .

Starting a small business takes time, effort and perseverance. But if you’re willing to put in the work, it can be a great way to achieve your dreams and goals. Be sure to do your research, create a solid business plan and pivot along the way. Once you’re operational, don’t forget to stay focused and organized so you can continue to grow your business.

How do I start a small business with no money?

There are several funding sources for brand-new businesses and most require a business plan to secure it. These include the SBA , private grants, angel investors, crowdfunding and venture capital.

What is the best business structure?

The best business structure for your business will depend entirely on what kind of company you form, your industry and what you want to accomplish. But any successful business structure will be one that will help your company set realistic goals and follow through on set tasks.

Do I need a business credit card?

You don’t need one, but a business credit card can be helpful for new small businesses. It allows you to start building business credit, which can help you down the road when you need to take out a loan or line of credit. Additionally, business credit cards often come with rewards and perks that can save you money on business expenses.

Do I need a special license or permit to start a small business?

The answer to this question will depend on the type of business you want to start and where you’re located. Some businesses, such as restaurants, will require a special permit or license to operate. Others, such as home daycare providers, may need to register with the state.

How much does it cost to create a business?

The cost of starting a business will vary depending on the size and type of company you want to create. For example, a home-based business will be less expensive to start than a brick-and-mortar store. Additionally, the cost of starting a business will increase if you need to rent or buy commercial space, hire employees or purchase inventory. You could potentially get started for free by dropshipping or selling digital goods.

How do I get a loan for a new business?

The best way to get a loan for a new business is to approach banks or other financial institutions and provide them with a business plan and your financial history. You can also look into government-backed loans, such as those offered by the SBA. Startups may also be able to get loans from alternative lenders, including online platforms such as Kiva.

Do I need a business degree to start a business?

No, you don’t need a business degree to start a business. However, acquiring a degree in business or a related field can provide you with the understanding and ability to run an effective company. Additionally, you may want to consider taking some business courses if you don’t have a degree to learn more about starting and running a business. You can find these online and at your local Small Business Administration office.

What are some easy businesses to start?

One of the easiest businesses to start also has the lowest overhead: selling digital goods. This can include items such as e-books, online courses, audio files or software. If you have expertise in a particular area or niche, this is a great option for you. Dropshipping is also a great option because you don’t have to keep inventory. You could also buy wholesale products or create your own. Once you create your product, you can sell it through your own website or third-party platforms such as Amazon or Etsy.

What is the most profitable type of business?

There is no one answer to this question because the most profitable type of business will vary depending on a number of factors, such as your industry, location, target market and business model. However, some businesses tend to be more profitable than others, such as luxury goods, high-end services, business-to-business companies and subscription-based businesses. If you’re not sure what type of business to start, consider your strengths and interests, as well as the needs of your target market, to help you choose a profitable business idea.

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Katherine Haan is a small business owner with nearly two decades of experience helping other business owners increase their incomes.

• Disaster recovery planning and management

Downtime can do serious damage to an organization's bottom line and reputation. Business continuity and disaster recovery -- two closely related practices -- help keep an organization running even in the wake of disaster. This guide explains how BCDR works, why you need it and how to build a BCDR plan for your organization to protect it today and into the future.

Disaster recovery (dr).

• Kinza Yasar, Technical Writer
• Erin Sullivan, Senior Site Editor
• Paul Crocetti, Executive Editor

What is disaster recovery (DR)?

Disaster recovery (DR) is an organization's ability to respond to and recover from an event that negatively affects business operations.

The goal of DR is to reduce downtime, data loss and operational disruptions while maintaining business continuity by restoring critical applications and infrastructure ideally within minutes after an outage. To prepare for this, organizations often perform an in-depth analysis of their systems and IT infrastructure and create a formal document to follow in times of crisis. This document is known as a disaster recovery plan .

What is a disaster?

The practice of DR revolves around serious events. These events are often thought of in terms of natural disasters, but they can also be caused by systems or technical failures, human errors or intentional attacks. These events are significant enough to disrupt or completely stop critical systems and business operations for a period of time. Types of disasters include the following:

• Cyberattacks, such as malware, distributed denial-of-service and ransomware .
• Power outages.
• Hardware failures.
• Equipment failures.
• Epidemics or pandemics, such as COVID-19.
• Terrorist attacks or biochemical threats.
• Industrial accidents.
• Hurricanes.
• Earthquakes.

Why is disaster recovery important?

Disasters can inflict damage with varying levels of severity, depending on the scenario. A brief network outage could result in frustrated customers and some loss of business to an e-commerce system. A hurricane or tornado could destroy an entire manufacturing facility, data center or office.

Also, the shift to public, private, hybrid and multi-cloud systems and the rise of remote workforces are making IT infrastructures more complex and potentially risky. An effective disaster recovery plan lets organizations respond promptly to disruptive events, offering the following benefits in return:

This article is part of

What is BCDR? Business continuity and disaster recovery guide

• Which also includes:
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• ITGC audit checklist: 6 controls you need to address
• 12 key points a disaster recovery plan checklist must include
• Business continuity. Disasters can significantly harm business operations, incurring costs and disrupting productivity. A DR plan enables automation and the swift restart of backup systems and data, ensuring a prompt resumption of scheduled operations.
• Data loss reduction. A well-designed disaster recovery plan aims to reduce the amount of data lost by using methods such as frequent backups, quick recovery and redundancy checks. The probability of data loss increases with the length of time an organization experiences a system outage, but effective DR planning reduces this risk.
• Cost reduction. The monetary costs of disasters and outages can be significant. According to results from Uptime Institute's "Annual outage analysis 2023" survey , 25% of respondents reported in 2022 that their latest outage incurred more than $1 million in direct and indirect costs, indicating a consistent upward trend in expenses. In addition, 45% reported that the cost of their most recent outage ranged between $100,000 and $1 million. With disaster recovery procedures in place, companies can get back on their feet quickly after outages, reducing recovery and operational costs.
• Help with compliance regulations. Many businesses are required to create and follow plans for disaster recovery, business continuity and data protection to meet compliance regulations. This is particularly important for organizations operating in the financial, healthcare, manufacturing and government sectors. Failure to have DR procedures in place can result in legal or regulatory penalties, so understanding how to comply with resilience standards is important.
• System security. A business can reduce the detrimental effects of ransomware, malware and other security threats by incorporating data protection, backup and restoration procedures into a disaster recovery plan. For instance, several built-in security mechanisms in cloud data backups can minimize questionable activity before it affects the company.
• Improved customer retention. When a disaster strikes, customer confidence in an organization's security and services can be questioned and easily lost. A solid disaster recovery plan, including employee training for handling inquiries, can boost customer assurance by demonstrating that the company is prepared for any disaster.
• Emergency preparedness. Thinking about disasters before they happen and creating a response plan can provide many benefits. It raises awareness about potential disruptions and helps an organization prioritize its mission-critical functions. It also provides a forum for discussing these topics and making careful decisions about how to best respond in a low-pressure setting. While preparing for every potential disaster might seem extreme, the COVID-19 pandemic illustrated that even scenarios that seem farfetched can happen. For example, businesses with emergency measures to support remote work had a clear advantage over unprepared companies when stay-at-home orders were enacted during the pandemic.

DR initiatives are more attainable by businesses of all sizes today due to widespread cloud adoption and the high availability of virtualization technologies that make backup and replication easier. However, much of the terminology and best practices developed for DR were based on enterprise efforts to re-create large-scale physical data centers. This involved plans to transfer, or failover , workloads from a primary data center to a secondary location or DR site to restore data and operations.

What is the difference between disaster recovery and business continuity?

On a practical level, DR and business continuity are often combined into a single corporate initiative and even abbreviated together as BCDR , but they aren't the same thing. While the two disciplines have similar goals relating to an organization's resilience, they differ greatly in scope.

Key points of DR and business continuity include the following:

• BC is a proactive discipline intended to minimize risk and help ensure the business can continue to deliver its products and services no matter the circumstances. It focuses especially on how employees continue to work and how the business continues operations while a disaster is occurring.
• DR is a subset of business continuity that focuses on the IT systems that enable business functions. It addresses the specific steps an organization must take to recover and resume technology operations following an event.
• BC is also closely related to business resilience , crisis management and risk management, but each of these disciplines has different goals and parameters.
• DR measures could typically include developing extra safety precautions for employees, such as buying emergency supplies or holding fire drills.
• A business continuity plan helps guarantee that communication channels, including phones and network servers, stay operational during a disaster.
• DR is also a reactive process by nature. While planning for it must be done in advance, DR activity isn't kicked off until a disaster actually occurs.
• Business continuity ensures the overall functioning and resilience of an organization throughout the entirety of an event, rather than solely focusing on the immediate aftermath.
• The disaster recovery process is complete once systems fail over to backup systems and are finally restored. With business continuity, plans stay in place for the entirety of the event and even after the systems are back up following the disaster.
• Top of Form

Elements of a disaster recovery strategy

Organizations should consider several factors while developing a disaster recovery strategy. Common elements of a DR strategy include the following:

Risk analysis

Risk analysis, or risk assessment , is an evaluation of all the potential risks the business could face, as well as their outcomes. Risks can vary greatly depending on the industry the organization is in and its geographic location. The assessment should identify potential hazards, determine whom or what these hazards would harm, and use the findings to create procedures that take these risks into account.

Business impact analysis

A business impact analysis ( BIA ) evaluates the effects of the identified risks on business operations. A BIA can help predict and quantify costs, both financial and nonfinancial. It also examines the effects of different disasters on an organization's safety, finances, marketing, business reputation, legal compliance and quality assurance.

Understanding the difference between risk analysis and BIA and conducting the assessments can also help an organization define its goals when it comes to data protection and the need for backup. Organizations generally quantify these using measurements called recovery point objective ( RPO ) and recovery time objective ( RTO ).

• RPO. RPO is the maximum age of files that an organization must recover from backup storage for normal operations to resume after a disaster. The RPO determines the minimum frequency of backups. For example, if an organization has an RPO of four hours, the system must back up at least every four hours.
• RTO. RTO refers to the amount of time an organization estimates its systems can be down without causing significant or irreparable damage to the business. In some cases, applications can be down for several days without severe consequences. In others, seconds can do substantial harm to the business.

RPO and RTO are both important elements in disaster recovery, but the metrics have different uses. RPO is acted on before a disruptive event takes place to ensure data is backed up, while RTO comes into play after an event occurs.

Incident response

This encompasses detecting, containing, analyzing and resolving a disruptive event. Incident response includes activating the disaster recovery plan, evaluating the incident's scope and effect, executing the recovery strategy, restoring normal operations and deactivating the plan. To maintain accountability and promote ongoing improvement, it's also essential to record and report incident response actions and results.

The components of a DR strategy can vary depending on the size, industry and particular demands of an organization. Therefore, these plans should be customized to meet the unique requirements of each business.

What's in a disaster recovery plan?

Once an organization has thoroughly reviewed its risk factors , recovery goals and technology environment, it can write a disaster recovery plan. The DR plan is the formal document that specifies these elements and outlines how the organization will respond when disruption or disaster occurs. The plan details recovery goals including RTO and RPO, as well as the steps the organization will take to minimize the effects of the disaster.

A DR plan should include the following components:

• A DR policy statement, plan overview and main goals of the plan.
• Key personnel and DR team contact information.
• A risk assessment and BIA to identify potential threats, vulnerabilities and negative effects on business.
• An updated IT inventory that includes details on hardware, software assets and essential cloud computing services, specifying their business-critical status and ownership, such as owned, leased or utilized as a service.
• A plan outlining how backups will be carried out along with an RPO that states the frequency of backups and an RTO that defines the maximum downtime that's acceptable after a disaster.
• A step-by-step description of disaster response actions immediately following an incident.
• A diagram of the entire network and recovery site.
• Directions for how to get to the recovery site.
• A list of software and systems that staff will use in the recovery.
• Sample templates for a variety of technology recoveries, including technical documentation from vendors.
• A communication that includes internal and external contacts, as well as a boilerplate for dealing with the media.
• A summary of insurance coverage.
• Proposed actions for dealing with financial and legal issues.

An organization should consider its DR plan a living document. It should schedule regular disaster recovery testing to ensure the plan is accurate and will work when a recovery is required. The plan should also be evaluated against consistent criteria whenever there are changes in the business or IT systems that could affect disaster recovery.

How to build a disaster recovery team

A DR team is entrusted with creating, documenting and carrying out processes and procedures for an organization's data recovery and business continuity in the event of a disaster or failure.

The key steps and considerations for building a disaster recovery team include the following:

• Identify the key stakeholders. Determine who within the organization should be involved in the disaster recovery planning process. A DR team typically includes cross-departmental employees and executives, such as the chief information officer , IT personnel, department heads, business continuity experts, impact assessment and recovery advisors and crisis management coordinators.
• Define roles and responsibilities. Once the members of the DR team are determined, the next step is to assign them specific roles and responsibilities to ensure effective management of the recovery process. Common roles include team leaders, IT experts, business continuity experts, disaster recovery coordinators and department liaisons.
• Assess expertise. If the organization lacks internal expertise, it can outsource or engage a service provider. These providers can offer external expertise to aid the team, deliver disaster recovery as a service ( DRaaS ), or provide consulting services to bolster the capabilities of the internal team.
• Develop a recovery plan. The team should outline a detailed disaster recovery plan that outlines procedures for responding to various types of disasters. This plan should include steps for data backup and recovery, system restoration, communication protocols and employee safety procedures.
• Train team members. It's important to teach and train team members on their responsibilities within the disaster recovery strategy. This could entail doing frequent drills and simulations to evaluate the plan's efficacy and pinpointing areas in need of development. For example, this could include testing all apps and finding ways to access the critical ones in the event of a disaster.
• Regularly revise the DR plan. The disaster recovery plan needs to be reviewed and updated regularly to reflect organizational changes and how they affect the recovery process.
• Document the procedures. All procedures and protocols within the DR plan should be documented in a clear and accessible format. This ensures that team members can easily reference and follow the necessary steps during a crisis.

Disaster recovery sites

An organization uses a DR site to recover and restore its data, technology infrastructure and operations when its primary data center is unavailable. DR sites can be internal, external or cloud-based.

An organization sets up and maintains an internal DR site. Organizations with large information requirements and aggressive RTOs are more likely to use an internal DR site, which is typically a second data center. When building an internal site, the business must consider hardware configuration, supporting equipment, power maintenance, heating and cooling of the site, layout design, location and staff.

An external disaster recovery site is owned and operated by a third-party provider. External sites can be hot, warm or cold.

• Hot site. A hot site is a fully functional data center with hardware and software, personnel and customer data, which is typically staffed 24/7 and operationally ready in the event of a disaster.
• Warm site. A warm site is an equipped data center that doesn't have customer data. An organization can install additional equipment and introduce customer data following a disaster.
• Cold site. This type of site has infrastructure to support IT systems and data, but no technology until an organization activates DR plans and installs equipment. These sites are sometimes used to supplement hot and warm sites during a long-term disaster.

A cloud-based disaster recovery site is another option, which is also scalable. An organization should consider site proximity, internal and external resources, operational risks, service-level agreements (SLAs) and cost when contracting with cloud providers to host their DR assets or outsourcing additional services .

Disaster recovery tiers

In addition to choosing the most appropriate DR site, it can be helpful for organizations to consult the tiers of disaster recovery identified by the Share Technical Steering Committee and IBM in the 1980s. The tiers feature a variety of recovery options organizations can use as a blueprint to help determine the best DR approach depending on their business needs.

The recognized disaster recovery tiers include the following:

• Tier 7. Tier 7 is a highly advanced level of disaster recovery capability. At this level, artificial intelligence and automation are likely to play a key part in the recovery process.
• Tier 6. Tier 6 disaster recovery capabilities are comparable to Tier 5's, but they often include even more sophisticated technology and techniques for rapid recovery and minimal data loss.
• Tier 5. Tier 5 often implies advanced disaster recovery capabilities beyond a hot site. This can include capabilities such as real-time data replication , automated failover and enhanced monitoring and administration tools.
• Tier 4. This tier includes a hot site, which is a DR site that's fully functioning and ready to use. Hot sites replicate the primary data center's systems and operations in real time, enabling quick failover and minimal downtime. They provide the maximum availability and recovery speed, but they're also the most expensive alternative.
• Tier 3. By electronically vaulting mission-critical data, Tier 3 options improve upon the capabilities of Tier 2. Electronic vaulting of data involves electronically transferring data to a backup site, in contrast to the traditional method of physically shipping backup tapes or disks. After a disaster, there's less chance of data loss or re-creation because the electronically vaulted data is usually more recent than data sent through conventional means.
• Tier 2. This tier improves upon Tier 1 with the addition of a hot site, which are disaster recovery locations that have hardware and network infrastructure already set up to facilitate faster recovery times. There might still be a need for additional setup and configuration.
• Tier 1. This level consists of cold sites that provide basic infrastructure but lack preinstalled systems. Businesses in this category have data backups, but recovery involves manual intervention and hardware configuration, which lengthens recovery times.
• Tier 0. This tier denotes the lowest preparedness level and is usually associated with organizations that don't have disaster recovery or off-site data backups . Because recovery in this tier is entirely dependent on on-site technologies, recovery times can be unpredictable.

Another type of DR tiering involves assigning levels of importance to different types of data and applications and treating each tier differently based on the tolerance for data loss. This approach recognizes that some mission-critical functions might not be able to tolerate any data loss or downtime, while others can be offline for longer or have smaller sets of data restored.

Types of disaster recovery

In addition to choosing a DR site and considering DR tiers, IT and business leaders must evaluate the best way to put their DR plan into action. This will depend on the IT environment and the technology the business chooses to support its DR strategy.

Types of disaster recovery can vary, based on the IT infrastructure and assets that need protection, as well as the method of backup and recovery the organization decides to use. Depending on the size and scope of the organization, it might have separate DR plans and response and resilience teams specific to different departments.

Major types of DR include the following:

• Data center disaster recovery. Organizations that house their own data centers must have a DR strategy that considers all the IT infrastructure within the data center as well as the physical facility. Backup to a failover site at a secondary data center or a colocation facility is often a large part of the plan. IT and business leaders should also document and make alternative arrangements for a wide range of facilities-related components, including power systems, heating and cooling, fire safety, and physical security.
• Network disaster recovery. Network connectivity is essential for internal and external communication, data sharing, and application access during a disaster. A network DR strategy must provide a plan for restoring network services, especially in terms of access to backup sites and data.
• Virtualized disaster recovery. Virtualization provides disaster recovery by letting organizations replicate workloads in an alternate location or the cloud. The benefits of virtual DR include flexibility, ease of deployment, efficiency and speed. Since virtualized workloads have a small IT footprint, replication can be done frequently, and failover can be initiated quickly.
• Cloud disaster recovery. The widespread acceptance of cloud services lets organizations, typically reliant on alternate or on-premises DR locations, host their disaster recovery in the cloud. Cloud DR goes beyond simple backup to the cloud. It requires an IT team to set up automatic failover of workloads to a public cloud platform in the event of a disruption.
• DRaaS. DRaaS is the commercially available version of cloud DR. In DRaaS, a third party provides replication and hosting of an organization's physical and virtual machines. The provider assumes responsibility for deploying the DR plan when a crisis arises, based on an SLA. In the event of a disaster, the DRaaS provider shifts an organization's computer processing to its cloud infrastructure. This enables uninterrupted business operations to be carried out seamlessly from the provider's location, even if the organization's servers are offline.
• Point-in-time snapshots. Point-in-time snapshots or copies generate a precise replica of the database at a specific time. Data recovery from these backups is possible, provided they're stored offsite or on an external machine unaffected by the catastrophe.

Disaster recovery services and vendors

Disaster recovery providers can take many forms, as DR is more than just an IT issue, and business continuity affects the entire organization. DR vendors include those selling backup and recovery software, as well as those offering hosted or managed services. Because disaster recovery is also an element of organizational risk management, some vendors couple it with other aspects of security planning, such as incident response and emergency planning.

Examples of options for DR services and vendors include the following:

• Backup and data protection platforms.
• DRaaS providers.
• Add-on services from data center and colocation providers.
• Infrastructure-as-a-service providers.

Choosing the best option for an organization ultimately depends on top-level business continuity plans and data protection goals, as well as which option best meets those needs and budgetary goals.

Examples of DR software and DRaaS providers include the following:

• Acronis Cyber Protect Cloud.
• Carbonite Disaster Recovery.
• Dell EMC RecoverPoint.
• Druva Data Resiliency Cloud.
• IBM Storage Protect Plus.
• Microsoft Azure Site Recovery.
• Unitrends Backup and Recovery.
• Veeam Backup & Replication.
• VMware Live Cyber Recovery (formerly known as VMware Cloud DR).

Emergency communication vendors are also a key part of the disaster recovery process, as they help keep employees informed during a crisis by sending them notifications and communications. Examples of vendors and their systems include AlertMedia, BlackBerry AtHoc, Cisco Emergency Responder, Everbridge Crisis Management and Rave Alert.

Download a free SLA template for use with disaster recovery products and services .

While some organizations might find it challenging to invest in comprehensive disaster recovery planning, none can afford to ignore the concept when planning for long-term growth and sustainability. In addition, if the worst were to happen, organizations that have prioritized DR would experience less downtime and be able to resume normal operations faster.

Businesses often prepare for minor disruptions, but it's easy to overlook larger and more intricate disasters. Examine the top scenarios for IT disasters that disaster recovery teams should test vigorously.

Continue Reading About disaster recovery (DR)

• SME disaster recovery: Key points to consider
• Game-changing disaster recovery trends
• Maximize the benefits of virtual disaster recovery
• Real-life business continuity failures: Examples to study
• Disaster recovery plan best practices for any business

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