Risk Management Strategies

What does risk aversion result in?

1. Decisions to avoid or ignore risk regardless of the information available and the costs incurred in treating those risks. 2. Failure to treat risks 3. Leaving critical choices and or decision to other parties 4. Deferring decisions which the organisation cannot avoid 5. Selecting an option because it represents a potential lower risk regardelss of benefits.

What are the five main categories of response to risk?

1. Treat 2. Transfer 3. Terminate 4. Tolerate 5. Take the opportunity

Define Treatment of risk

Action taken to reduce either the probability or the impact of the impact of the risk.

Define Transfer of Risk

Risk is transferred either in whole or i part. Insuring against a risk will reduce th eimpact in a financial sense but is unlikely to fix issues of business discontinuity.

What is meant by Risk Appetite?

The amount of risk tolerated. . The amount of risk to which the organisation is preapred to be exposed before it judges action to be necessary.

Define Tolerating of risk

Tolerating where the impact and or likelihood is inherently low or where the controls or other risk managememtn activity have reduced them to low residual levels and any further reduction would not be cost effective.

Define Terminating of risk

Walking away - response to a risk that cannot be contained by treatment or transfer