risk reduction business plan

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

Popular articles

How To Write KPIs In 4 Steps + Free KPI Template

35 Noteworthy Vision Statement Examples (+ Free Template)

How To Write A Vision Statement In 4 Steps + Tips & Examples

McKinsey GE Matrix: Importance & How To Use It (2024)

Your toolkit for strategy success.

• Share on Twitter
• Share on LinkedIn
• Share on Facebook
• Share on Pinterest
• Share through Email

How To Create A Risk Management Plan + Template & Examples

Emily has been working in project management for over 13 years. In this time, she has worked using a variety of project management methodologies and has been a strategic project manager, facilitator, and Scrum master. She is also an avid coach and trainer, who wants to ensure the development of the next generation of project professionals through training, knowledge sharing and team building.

Sarah is a project manager and strategy consultant with 15 years of experience leading cross-functional teams to execute complex multi-million dollar projects. She excels at diagnosing, prioritizing, and solving organizational challenges and cultivating strong relationships to improve how teams do business. Sarah is passionate about productivity, leadership, building community, and her home state of New Jersey.

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 project 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.

Sign up to get weekly insights, tips, and other helpful content from digital project management experts.

• Your email *
• Yes, I want to sign up to receive regular emails filled with tips, expert insights, and more to build my PM practice.
• By submitting you agree to receive occasional emails and acknowledge our Privacy Policy . You can unsubscribe at any time. Protected by reCAPTCHA; Google Privacy Policy and Terms of Service apply.
• Phone This field is for validation purposes and should be left unchanged.

#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 strategy , 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

Project risk management: how to do it well & 5 expert tips, time tracking: your secret risk management superpower, increase project success with a risk register + easy template, 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!

• Product overview
• All features
• Latest feature release
• App integrations

CAPABILITIES

• project icon Project management
• Project views
• Custom fields
• Status updates
• goal icon Goals and reporting
• Reporting dashboards
• workflow icon Workflows and automation
• portfolio icon Resource management
• Capacity planning
• Time tracking
• my-task icon Admin and security
• Admin console
• asana-intelligence icon Asana AI
• list icon Personal
• premium icon Starter
• briefcase icon Advanced
• Goal management
• Organizational planning
• Campaign management
• Creative production
• Content calendars
• Marketing strategic planning
• Resource planning
• Project intake
• Product launches
• Employee onboarding
• View all uses arrow-right icon
• Project plans
• Team goals & objectives
• Team continuity
• Meeting agenda
• View all templates arrow-right icon
• Work management resources Discover best practices, watch webinars, get insights
• Customer stories See how the world's best organizations drive work innovation with Asana
• Help Center Get lots of tips, tricks, and advice to get the most from Asana
• Asana Academy Sign up for interactive courses and webinars to learn Asana
• Developers Learn more about building apps on the Asana platform
• Community programs Connect with and learn from Asana customers around the world
• Events Find out about upcoming events near you
• Partners Learn more about our partner programs
• Support Need help? Contact the Asana support team
• Asana for nonprofits Get more information on our nonprofit discount program, and apply.

Featured Reads

• Leadership |
• 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

Data-driven decision making: A step-by-step guide

Listening to understand: How to practice active listening (with examples)

How executives and individual contributors differ when it comes to AI

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

What Is A Risk Management Plan?

Last Updated: September 19, 2023

Risk management is all about planning: planning for what might go wrong if x happens; planning y as a reaction for when something does, in fact, go wrong. Depending on what you’re working on at your business, you are up against a unique variety of potential risks.

In order for your business to succeed, it’s important to continuously evolve – and there are always ways to improve and expand your business. We’ve come to know these temporary initiatives with distinct deliverables as “projects.”

Some common examples of projects an organization may take on include:

• Building or closing a facility
• Re-branding
• Developing or discontinuing a product or service
• Migrating to a new software
• Expanding or reducing service to a particular industry
• Training a new group of employees

Taking a risk-based approach to new projects means thinking about the implications of any new project on all other areas of your organization. The best place to start is by creating a risk management plan to steer your team and organization in the right direction throughout the course of the project.

This guide will explain “what is a risk management plan?” Describe the purpose of a risk management plan, share what should be included in a risk management plan and provide examples of everything along the way.

Table of Contents

What is a risk management plan?

A risk management plan is a term used to describe a key project management process. A risk management plan enables project managers to see ahead to potential risks and reduce their negative impact. A new project welcomes in new opportunities but also potential risks so a risk management plan is a must for risk project managers.

In order to effectively manage the project and lead their project team to a successful outcome, they may develop and defer to a project risk management plan throughout the duration of the project.

What is the purpose of a risk management plan?

The purpose of a risk management plan is to help you identify, evaluate and plan for possible risks that may arise within the project management process. Think of it as a blueprint walking you through every stage of construction, including potential areas where demolition may be needed, external contractors may be hired, or budget may be stretched.

What is included in a risk management plan?

Risk Identification

Identifying the risks that may be associated with taking on a new project or continuing an existing one should be the first step to developing your risk management plan. Failure to conduct risk identification and identify risks ahead of time can lead to a number of negative financial outcomes that don’t reduce the impact of the risk, especially those that are high risk:

• Inadequate employee training can lead to incompetence’s, which can lead to disgruntled customers and ultimately loss of business.
• Building a new facility in a flood-prone area without purchasing flood insurance can lead to substantial sunken costs.
• Investing R&D into a new product that fails to excite the market takes a toll on your business valuation, which can turn investors away.

The list goes on. Ultimately, formalizing the process of identifying new risks lets you take a step back and notice systemic risks that may not have otherwise been uncovered had the proper time not been invested in this key part of risk analysis.

Project risk assessment

Next, for a project manager, it’s important to think about the implications of any new or existing project on all other areas of your organization. Conducting a project management risk assessment on that project will help reveal those implications ahead of time so you can effectively prevent undue risk. It’s important to be sure to assess risk in a uniform fashion. One of the best ways for a risk owner to do this is by prioritizing data and risk metric collection.

Risk assessment matrix

A risk assessment matrix is the best way for a risk project manager to collect and aggregate data used during your risk assessment. It’s created to help you identify the overlapping activities that crowd your risk management plan. The risk assessment matrix is essential in determining and defining the level and the implications of any particular risk.

Start by addressing a particular business area. Then, include a description of a risk that may be associated with that business area. Continue on by completing a risk analysis: identify the source of the risk, what could go wrong, and the impact of the risk. Then, you’ll need to decide the likelihood and assurance of the risk occurring.

Many organizations use a high-medium-low scale when assessing risk, but this actually isn’t best practice. High-medium and low scales make it difficult and time-consuming to quantify, aggregate, and objectively rank information. With only three options to choose from, they’ll likely feel conflicted about which one to choose. In reality, best practice favors a 1-10 scale, with 10 having the most unfavorable consequences to the organization.

This is something that helps to prioritize risks. You find out more about the risk prioritization process here.

Let’s take a look at the line items to assess a risk associated with re-opening an office amidst the pandemic:

• Risk: Inadequate policies to prevent the spread of the virus to employees and/or visitors.
• Risk analysis: what can go wrong?
• Employees become uncomfortable wearing their mask for too long and decide to remove it while conversing with colleagues. Virus is then spread throughout the workforce.
• Customer refuses to wear a mask out of principle and must be asked to leave the premises, causing a scene.
• Employees and/or customers do not stay 6 feet apart from one another.

Risk Appetite Response Plan

After you’ve identified and assessed your risks the next step of any risk analysis project focuses on determining how you will respond to those risks. Risk response involves developing strategic options that can increase positive outcomes and reduce risk.

Your risk response plan should determine which actions you take in order to experience the most positive outcome and also consider your own risk appetite and tolerance levels . Critical elements that will help define your risk response are risk mitigation and risk monitoring.

Risk Mitigation

The efforts you take (or plan on taking) to control the risk being assessed should be included within your risk assessment matrix. This part of the project management risk process is referred to as mitigation . Risk mitigation is defined as the process of reducing a risk event and minimizing the likelihood of a potential risk.

Considering the above scenario, here are a few mitigations that might be developed and included within your matrix and overall plan:

• Enforcing strict consequences for employees who are caught not wearing their mask. Dedicating particular areas outside where employees can go to take a break from wearing their mask at lunch.
• Hanging signs on the front door that refuse people entry without a mask. Stationing employees at the front door who do not let anyone in without a mask.
• Placing dots six feet apart from one another to instruct people on where to stand in line and prevent crowding.

As you can see these help to create a contingency plan against negative impact.

What is a Risk Register?

A Risk Register is a document that contains all of the information we’ve mentioned thus far: the risks you’ve identified and assessed, as well as the results and risk response plan. Many people choose to create a Risk Register to steer them throughout every project, particularly throughout the monitoring phase.

Risk Monitoring

Monitoring risk over the course of the project should be an ongoing and proactive part of risk analysis. It involves project management to conduct consistent testing by the risk owner throughout the project, metric collection, and incidents remediation to certify that your efforts are on track to be completed, aligned with your strategic goals, and allowing your mitigating controls to remain effective. Continually monitoring your risks also allows you to identify and address emerging trends to determine whether or not you’re making progress on more long-term initiatives.

Risk monitoring helps you create key connections between risks, business units, mitigation activities, and more. This way, you’re able to paint a more cohesive picture of your organization as a whole. Completing your monitoring activities within LogicManager, a comprehensive ERM platform , you inherently break down organizational silos and ultimately eliminate the chances of missing critical pieces of information.

Learn more about how our interconnected platform can help you streamline your risk monitoring activities here .

Reporting On Your Risk Management Plan

If you’re a project manager, it’s likely that you have a more holistic, bird’s eye view of the project’s progress than the rest of your project team. While they’re focused on completing day-to-day tasks to complete a larger initiative, you’re looking at the bigger picture.

One of the best ways to communicate that bigger picture to your project team is through reports. Presenting information about your project – as well as everyone’s alignment with your risk management plan – demonstrates effectiveness and strong leadership, and can rally the support of various stakeholders.

Examples of reports for your risk management plan

It’s important that these risk reports are engaging and easily digestible so that your project team has a clear understanding of where their efforts and the work of their team members stands. LogicManager’s risk reports are built on powerful taxonomy technology that centralizes information and breaks down silos. Our software comes with a wide range of reports that enable you to do anything from checking the status of outstanding tasks and reviewing incidents, to proving compliance and ensuring policies are up to date.

Achieve your risk management plan with LogicManager

As a Project Manager, risk is just one of your many duties; but it’s an integral one. Identifying the risks that may threaten the successful completion of your capital, strategic and tactical goals is the only way to ensure everything stays on trajectory.

But you’re also responsible for prioritizing and tracking the status of the project (and possibly many others) all the while respecting your project team’s time, the quality of the results, and your budget. Reporting is a must as you communicate the risks, opportunities, and needs of projects to stakeholders like your project team, senior management, and the board.

Without project risk management software , staying on time, on budget, and on scope is difficult.

• Spreadsheets and emails make information hard to collect, update and share.
• Engaging the proper business units and subject matter experts requires an unnecessary amount of effort without an automated system.
• Knowing where to start a project risk assessment is a headache without a framework of project risk management tools.
• Reporting is inefficient when you have to hunt down information across disparate systems.

It’s a hard job, but LogicManager makes it easy by erasing all your pain points at once.

• Prioritize your organization’s most critical projects and identify potential risks with intuitive and objective project risk assessments.
• Create and link mitigation activities to the risks, resources, and processes they impact with taxonomy technology.
• Confidently embark on new projects with one standardized framework.
• Enhance collaboration and communication across the enterprise with automated workflows, notifications, and reminders.
• Maintain your responsibilities and track the status of your projects with easily accessible to-do lists.
• Align with industry best practices like ISO by leveraging ready-made libraries of standards and regulations.
• Track project incidents and outline steps towards maturity with integrated incident management capabilities.
• Effectively communicate status, timeline, and risks to the board with ready-made, highly configurable reports, and dashboards.

Ready to make project risk management easy with LogicManager? Request a demo today and see how our software can help you prioritize your projects, streamline communication, and ensure successful completion.

7 Ways to Build the Business Case for ERM Software

Why stick to spreadsheets for ERM? Learn how to build a compelling business case for ERM software in this complimentary ebook.

Share This Post

Stay informed, related content.

Your Content Goes [...]

IMPACT 2024 Case [...]

Complimentary eBook: 7 Ways to Build the Business Case for ERM Software

In the rapidly changing business landscape, why stick to spreadsheets for ERM? Get the eBook now to build your compelling business case for ERM software and propel your organization forward in the See-Through Economy.

My Favorites List

Submit your Favorites List and our experts will reach out to you with more information. You will also receive this list as an e-mail which you can share with others. Here are the solutions you've added to your list so far:

• Twitter icon
• Facebook icon
• LinkedIn icon

7 Steps to Write a Risk Management Plan For Your Next Project (With Free Template!)

🎁 Bonus Material: Free Risk Management Template

5 Steps to Find Your Definition of Done (With Examples and Workflows)

3 Steps to Minimize Workplace Distraction And Take Back Control of your Focus

The Essential Guide to Writing a Project Communication Plan: What It Is and Why You (Actually) Need One

Working with planio, see how our customers use planio.

Get started

• Project management
• CRM and Sales
• Work management
• Product development life cycle
• Comparisons
• Construction management
• monday.com updates

What is Risk Mitigation? 4 Useful Strategies to Mitigate Risk

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.

Image Source

Many businesses organize matrices by potential 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.

Risk avoidance

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.

Risk reduction

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:

Risk transfer

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.

Risk acceptance

Lastly, we have the risk 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 all possible risks

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.

2. Conduct a risk assessment

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.

3. Treat the 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:

4. Monitor risks regularly

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

There are many different ways you could conduct risk monitoring. 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.

5. Report on any potential risks

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 .

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.

What are the 4 Ts of risk management?

There are different ways of mitigating actual and potential risks. One common way to summarize the critical steps required to mitigate risk are - tolerate, terminate, treat, and transfer.

What are two basic strategies for mitigating risk?

There are first basic steps to mitigate risk. First, identify all the various activities or steps to reduce the probability or potential impact of an adverse risk. Second, create an action plan to deal with risk should it occur.

What is the goal of risk mitigation?

The goal of risk mitigation is to reduce the likelihood of business or project risk down to an acceptable level, as well as to put strategies in place to monitor and respond to potential threats in the event they happen. Risks could involve a financial risk caused by a natural disaster, or a cybersecurity risk. Mitigation strategies could include an insurance policy, a better project planning process, employee training, or a better contingency plan.

• Project change management
• Project risk management

Don’t miss more quality content!

Send this article to someone who’d like it.

Managing work when you have ADHD, Dyslexia, & Autism

Learn about our open source solutions

Read more about AI, Strategy, ADHD, and more.

Estimated reading time: 15 minutes

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.

Support Leantime

Leantime is an open source project and lives and breathes through its community.

If you like Leantime and want to support us you can start by giving us a Star on Github or through a sponsorship.

• Business Essentials
• Leadership & Management
• Credential of Leadership, Impact, and Management in Business (CLIMB)
• Entrepreneurship & Innovation
• Digital Transformation
• Finance & Accounting
• Business in Society
• For Organizations
• Support Portal
• Media Coverage
• Founding Donors
• Leadership Team

• Harvard Business School →
• HBS Online →
• Business Insights →

Business Insights

Harvard Business School Online's Business Insights Blog provides the career insights you need to achieve your goals and gain confidence in your business skills.

• Career Development
• Communication
• Decision-Making
• Earning Your MBA
• Negotiation
• News & Events
• Productivity
• Staff Spotlight
• Student Profiles
• Work-Life Balance
• AI Essentials for Business
• Alternative Investments
• Business Analytics
• Business Strategy
• Business and Climate Change
• Creating Brand Value
• Design Thinking and Innovation
• Digital Marketing Strategy
• Disruptive Strategy
• Economics for Managers
• Entrepreneurship Essentials
• Financial Accounting
• Global Business
• Launching Tech Ventures
• Leadership Principles
• Leadership, Ethics, and Corporate Accountability
• Leading Change and Organizational Renewal
• Leading with Finance
• Management Essentials
• Negotiation Mastery
• Organizational Leadership
• Power and Influence for Positive Impact
• Strategy Execution
• Sustainable Business Strategy
• Sustainable Investing
• Winning with Digital Platforms

What Is Risk Management & Why Is It Important?

• 24 Oct 2023

Businesses can’t operate without risk. Economic, technological, environmental, and competitive factors introduce obstacles that companies must not only manage but overcome.

According to PwC’s Global Risk Survey , organizations that embrace strategic risk management are five times more likely to deliver stakeholder confidence and better business outcomes and two times more likely to expect faster revenue growth.

If you want to enhance your job performance and identify and mitigate risk more effectively, here’s a breakdown of what risk management is and why it’s important.

Access your free e-book today.

What Is Risk Management?

Risk management is the systematic process of identifying, assessing, and mitigating threats or uncertainties that can affect your organization. It involves analyzing risks’ likelihood and impact, developing strategies to minimize harm, and monitoring measures’ effectiveness.

“Competing successfully in any industry involves some level of risk,” says Harvard Business School Professor Robert Simons, who teaches the online course Strategy Execution . “But high-performing businesses with high-pressure cultures are especially vulnerable. As a manager, you need to know how and why these risks arise and how to avoid them.”

According to Strategy Execution , strategic risk has three main causes:

• Pressures due to growth: This is often caused by an accelerated rate of expansion that makes staffing or industry knowledge gaps more harmful to your business.
• Pressures due to culture: While entrepreneurial risk-taking can come with rewards, executive resistance and internal competition can cause problems.
• Pressures due to information management: Since information is key to effective leadership , gaps in performance measures can result in decentralized decision-making.

These pressures can lead to several types of risk that you must manage or mitigate to avoid reputational, financial, or strategic failures. However, risks aren’t always obvious.

“I think one of the challenges firms face is the ability to properly identify their risks,” says HBS Professor Eugene Soltes in Strategy Execution .

Therefore, it’s crucial to pinpoint unexpected events or conditions that could significantly impede your organization’s business strategy .

Related: Business Strategy vs. Strategy Execution: Which Course Is Right for Me?

According to Strategy Execution , strategic risk comprises:

• Operations risk: This occurs when internal operational errors interrupt your products or services’ flow. For example, shipping tainted products can negatively affect food distribution companies.
• Asset impairment risk: When your company’s assets lose a significant portion of their current value because of a decreased likelihood of receiving future cash flows . For instance, losing property assets, like a manufacturing plant, due to a natural disaster.
• Competitive risk: Changes in the competitive environment can interrupt your organization’s ability to create value and differentiate its offerings—eventually leading to a significant loss in revenue.
• Franchise risk: When your organization’s value erodes because stakeholders lose confidence in its objectives. This primarily results from failing to control any of the strategic risk sources listed above.

Understanding these risks is essential to ensuring your organization’s long-term success. Here’s a deeper dive into why risk management is important.

4 Reasons Why Risk Management Is Important

1. protects organization’s reputation.

In many cases, effective risk management proactively protects your organization from incidents that can affect its reputation.

“Franchise risk is a concern for all businesses,“ Simons says in Strategy Execution . “However, it's especially pressing for businesses whose reputations depend on the trust of key constituents.”

For example, airlines are particularly susceptible to franchise risk because of unforeseen events, such as flight delays and cancellations caused by weather or mechanical failure. While such incidents are considered operational risks, they can be incredibly damaging.

In 2016, Delta Airlines experienced a national computer outage, resulting in over 2,000 flight cancellations. Delta not only lost an estimated $150 million but took a hit to its reputation as a reliable airline that prided itself on “canceling cancellations.”

While Delta bounced back, the incident illustrates how mitigating operational errors can make or break your organization.

2. Minimizes Losses

Most businesses create risk management teams to avoid major financial losses. Yet, various risks can still impact their bottom lines.

A Vault Platform study found that dealing with workplace misconduct cost U.S. businesses over $20 billion in 2021. In addition, Soltes says in Strategy Execution that corporate fines for misconduct have risen 40-fold in the U.S. over the last 20 years.

One way to mitigate financial losses related to employee misconduct is by implementing internal controls. According to Strategy Execution , internal controls are the policies and procedures designed to ensure reliable accounting information and safeguard company assets.

“Managers use internal controls to limit the opportunities employees have to expose the business to risk,” Simons says in the course.

One company that could have benefited from implementing internal controls is Volkswagen (VW). In 2015, VW whistle-blowers revealed that the company’s engineers deliberately manipulated diesel vehicles’ emissions data to make them appear more environmentally friendly.

This led to severe consequences, including regulatory penalties, expensive vehicle recalls, and legal settlements—all of which resulted in significant financial losses. By 2018, U.S. authorities had extracted $25 billion in fines, penalties, civil damages, and restitution from the company.

Had VW maintained more rigorous internal controls to ensure transparency, compliance, and proper oversight of its engineering practices, perhaps it could have detected—or even averted—the situation.

Related: What Are Business Ethics & Why Are They Important?

3. Encourages Innovation and Growth

Risk management isn’t just about avoiding negative outcomes. It can also be the catalyst that drives your organization’s innovation and growth.

“Risks may not be pleasant to think about, but they’re inevitable if you want to push your business to innovate and remain competitive,” Simons says in Strategy Execution .

According to PwC , 83 percent of companies’ business strategies focus on growth, despite risks and mixed economic signals. In Strategy Execution , Simons notes that competitive risk is a challenge you must constantly monitor and address.

“Any firm operating in a competitive market must focus its attention on changes in the external environment that could impair its ability to create value for its customers,” Simons says.

This requires incorporating boundary systems —explicit statements that define and communicate risks to avoid—to ensure internal controls don’t extinguish innovation.

“Boundary systems are essential levers in businesses to give people freedom,” Simons says. “In such circumstances, you don’t want to stifle innovation or entrepreneurial behavior by telling people how to do their jobs. And if you want to remain competitive, you’ll need to innovate and adapt.”

Netflix is an example of how risk management can inspire innovation. In the early 2000s, the company was primarily known for its DVD-by-mail rental service. With growing competition from video rental stores, Netflix went against the grain and introduced its streaming service. This changed the market, resulting in a booming industry nearly a decade later.

Netflix’s innovation didn’t stop there. Once the steaming services market became highly competitive, the company shifted once again to gain a competitive edge. It ventured into producing original content, which ultimately helped differentiate its platform and attract additional subscribers.

By offering more freedom within internal controls, you can encourage innovation and constant growth.

4. Enhances Decision-Making

Risk management also provides a structured framework for decision-making. This can be beneficial if your business is inclined toward risks that are difficult to manage.

By pulling data from existing control systems to develop hypothetical scenarios, you can discuss and debate strategies’ efficacy before executing them.

“Interactive control systems are the formal information systems managers use to personally involve themselves in the decision activities of subordinates,” Simons says in Strategy Execution . “Decision activities that relate to and impact strategic uncertainties.”

JPMorgan Chase, one of the most prominent financial institutions in the world, is particularly susceptible to cyber risks because it compiles vast amounts of sensitive customer data . According to PwC , cybersecurity is the number one business risk on managers’ minds, with 78 percent worried about more frequent or broader cyber attacks.

Using data science techniques like machine learning algorithms enables JPMorgan Chase’s leadership not only to detect and prevent cyber attacks but address and mitigate risk.

Start Managing Your Organization's Risk

Risk management is essential to business. While some risk is inevitable, your ability to identify and mitigate it can benefit your organization.

But you can’t plan for everything. According to the Harvard Business Review , some risks are so remote that no one could have imagined them. Some result from a perfect storm of incidents, while others materialize rapidly and on enormous scales.

By taking an online strategy course , you can build the knowledge and skills to identify strategic risks and ensure they don’t undermine your business. For example, through an interactive learning experience, Strategy Execution enables you to draw insights from real-world business examples and better understand how to approach risk management.

Do you want to mitigate your organization’s risks? Explore Strategy Execution —one of our online strategy courses —and download our free strategy e-book to gain the insights to build a successful strategy.

About the Author

• Contact sales

Start free trial

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 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 managing project risks is to identify them. Use data sources such as information from past projects or subject matter experts’ opinions to estimate all the potential risks that can impact the project.
• Risk Assessment: Once the project risks are identified, 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.

Even one risk can jeopardize the entire project plan . There isn’t usually just one risk per project, either; there are many risk categories that require assessment and discussion with 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 a risk management plan.

What Is a Risk Management Plan?

A risk management plan defines how the 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.

Get your free

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 to document the risk identification information.
• Risk Breakdown Structure: This is a chart that identifies risk categories and the hierarchical structure of project risks.
• Risk Assessment Matrix: A risk assessment matrix allows teams to analyze the likelihood and the impact of project risks so they 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 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 to identify the funds required to perform 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 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. We’ve outlined the steps to make a risk management plan 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.

Create a risk breakdown structure to identify 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 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 to share with everyone interviewed for a centralized location of all known risks revealed during the identification phase.

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

2. Risk Assessment

In this next phase, review the qualitative and quantitative impact of the risk—like the likelihood of the risk occurring versus the impact it would have on the 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, map out the risk impact from low to medium to high and assign each a score. This provides an idea of how likely the risk is to impact project success 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 the impact level score with the risk probability score.

3. Create a Risk Response Plan

A risk response is the action plan taken to mitigate project risks when they occur. The risk response plan includes risk mitigation strategies to mitigate the impact of project risks. 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 before creating the risk management plan.

4. Assign Risk Owners

Next, assign a risk owner to each project risk. Those risk owners become accountable for monitoring the risks assigned to them and supervising the execution of the risk response if needed.

Related: Risk Tracking Template

When creating the 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 the exact risk response for each project risk with a risk register and have the risk response plan approved by all stakeholders before implementation. That way, there’s a record of the issue and the resolution to review once the project is finalized.

5. Understand Your Triggers

This can happen with or without a risk already having impacted the 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. Project risks can change in classification at any point, and because of that, come up with a contingency plan as part of the 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.

7. Measure Your Risk Threshold

Measuring your risk threshold is all about discovering which risk is too high and consulting with 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 risks as they raise issues in the project, use project management software. ProjectManager has real-time dashboards embedded in our tool, unlike other software that require teams to manually build them. We automatically calculate the health of projects, checking if teams are on time or running behind. Get a high-level view of how much you’re spending, progress and more. The quicker the risk is identified, the faster you can resolve it.

Free Risk Management Plan Template

This free risk management plan template will help prepare your team for any risks inherent in the 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 the 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 constantly evolving throughout 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 for maintaining your risk management plan. Watch the video below to see just how important project management dashboards, live data and project reports can be for keeping projects on track and budget.

In addition to 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 the 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 help identify any new risks to be assessed and shows if any previous risks have expired.

How ProjectManager Can Help 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 provide 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. However, 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.

Deliver your projects on time and on budget

Start planning your projects.

• SUGGESTED TOPICS
• The Magazine
• Newsletters
• Managing Yourself
• Managing Teams
• Work-life Balance
• The Big Idea
• Data & Visuals
• Reading Lists
• Case Selections
• HBR Learning
• Topic Feeds
• Account Settings
• Email Preferences

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.

Partner Center

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.

Read how KuppingerCole recognized IBM Security Trusteer as a leader in fraud reduction.

Register for the Gartner Magic Quadrant

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.

An intelligent, integrated unified cyberthreat management solution can help you keep defenses sharp, detect advanced threats, quickly respond with accuracy and recover from disruptions.

Develop and implement successful risk management strategies while enhancing your programs for conducting risk assessments, meeting regulations, and achieving compliance.

Reduce the risk of disruption to business operations due to cyberattacks, human error, system failures, natural disasters and other data loss risks.

Read how generative AI brings forth new threats and what cybersecurity leaders can do to respond proactively.

Explore the financial impacts and security measures that can help your organization avoid a data breach in the Cost of a Data Breach 2023 report.

Understand your cyberattacks risks with a global view of the threats landscape by reading actionable insights to help you understand how threat actors are waging attacks.

Find out how threat management is used by cybersecurity professionals to prevent cyber attacks, detect cyber threats and respond to security incidents.

Discover how companies manage cybersecurity risk management to protect information systems from cyberattacks and other digital and physical threats.

Find out how an organization can use GRC to manage governance, risk management and compliance with industry and government regulations.

IBM cybersecurity services deliver advisory, integration and managed security services and offensive and defensive capabilities. We combine a global team of experts with proprietary and partner technology to co-create tailored security programs that manage risk.

What is business risk?

You know about death and taxes. What about risk? Yes, risk is just as much a part of life as the other two inevitabilities. This became all the more apparent during COVID-19, as each of us had to assess and reassess our personal risk calculations as each new wave of the pandemic— and pandemic-related disruptions —washed over us. It’s the same in business: executives and organizations have different comfort levels with risk and ways to prepare against it.

Where does business risk come from? To start with, external factors can wreak havoc on an organization’s best-laid plans. These can include things like inflation , supply chain  disruptions, geopolitical upheavals , unpredictable force majeure events like a global pandemic or climate disaster, competitors, reputational  issues, or even cyberattacks .

But sometimes, the call is coming from inside the house. Companies can be imperiled by their own executives’ decisions or by leaks of privileged information, but most damaging of all, perhaps, is the risk of missed opportunities. We’ve seen it often: when companies choose not to adopt disruptive innovation, they risk losing out to more nimble competitors.

The modern era is rife with increasingly frequent sociopolitical, economic, and climate-related shocks. In 2019 alone, for example, 40 weather disasters caused damages exceeding $1 billion each . To stay competitive, organizations should develop dynamic approaches to risk and resilience. That means predicting new threats, perceiving changes in existing threats, and developing comprehensive response plans. There’s no magic formula that can guarantee safe passage through a crisis. But in situations of threat, sometimes only a robust risk-management plan can protect an organization from interruptions to critical business processes. For more on how to assess and prepare for the inevitability of risk, read on.

Learn more about McKinsey’s Risk and Resilience  Practice.

What is risk control?

Risk controls are measures taken to identify, manage, and eliminate threats. Companies can create these controls through a range of risk management strategies and exercises. Once a risk is identified and analyzed, risk controls can be designed to reduce the potential consequences. Eliminating a risk—always the preferable solution—is one method of risk control. Loss prevention and reduction are other risk controls that accept the risk but seek to minimize the potential loss (insurance is one method of loss prevention). A final method of risk control is duplication (also called redundancy). Backup servers or generators are a common example of duplication, ensuring that if a power outage occurs no data or productivity is lost.

But in order to develop appropriate risk controls, an organization should first understand the potential threats.

What are the three components to a robust risk management strategy?

A dynamic risk management plan can be broken down into three components : detecting potential new risks and weaknesses in existing risk controls, determining the organization’s appetite for risk taking, and deciding on the appropriate risk management approach. Here’s more information about each step and how to undertake them.

1. Detecting risks and controlling weaknesses

A static approach to risk is not an option, since an organization can be caught unprepared when an unlikely event, like a pandemic, strikes. So it pays to always be proactive. To keep pace with changing environments, companies should answer the following three questions for each of the risks that are relevant to their business.

• How will a risk play out over time? Risks can be slow moving or fast moving. They can be cyclical or permanent. Companies should analyze how known risks are likely to play out and reevaluate them on a regular basis.
• Are we prepared to respond to systemic risks? Increasingly, risks have longer-term reputational or regulatory consequences, with broad implications for an industry, the economy, or society at large. A risk management strategy should incorporate all risks, including systemic ones.
• What new risks lurk in the future? Organizations should develop new methods of identifying future risks. Traditional approaches that rely on reviews and assessments of historical realities are no longer sufficient.

2. Assessing risk appetite

How can companies develop a systematic way of deciding which risks to accept and which to avoid? Companies should set appetites for risk that align with their own values, strategies, capabilities, and competitive environments—as well as those of society as a whole. To that end, here are three questions companies should consider.

• How much risk should we take on? Companies should reevaluate their risk profiles frequently according to shifting customer behaviors, digital capabilities, competitive landscapes, and global trends.
• Are there any risks we should avoid entirely? Some risks are clear: companies should not tolerate criminal activity or sexual harassment. Others are murkier. How companies respond to risks like economic turmoil and climate change depend on their particular business, industry, and levels of risk tolerance.
• Does our risk appetite adequately reflect the effectiveness of our controls? Companies are typically more comfortable taking risks for which they have strong controls in place. But the increased threat of severe risks challenges traditional assumptions about risk control effectiveness. For instance, many businesses have relied on automation to increase speed and reduce manual error. But increased data breaches and privacy concerns can increase the risk of large-scale failures. Organizations, therefore, should evolve their risk profiles accordingly.

3. Deciding on a risk management approach

Finally, organizations should decide how they will respond when a new risk is identified. This decision-making  process should be flexible and fast, actively engaging leaders from across the organization and honestly assessing what has and hasn’t worked in past scenarios. Here are three questions organizations should be able to answer.

• How should we mitigate the risks we are taking? Ultimately, people need to make these decisions and assess how their controls are working. But automated control systems should buttress human efforts. Controls guided, for example, by advanced analytics can help guard against quantifiable risks and minimize false positives.
• How would we respond if a risk event or control breakdown happens? If (or more likely, when) a threat occurs, companies should be able to switch to crisis management mode quickly, guided by an established playbook. Companies with well-rehearsed crisis management capabilities weather shocks better, as we saw with the COVID-19 pandemic.
• How can we build true resilience? Resilient companies not only better withstand threats—they emerge stronger. The most resilient firms can turn fallout from crises into a competitive advantage. True resilience stems from a diversity of skills and experience, innovation, creative problem solving, and the basic psychological safety that enables peak performance.

Change is constant. Just because a risk control plan made sense last year doesn’t mean it will next year. In addition to the above points, a good risk management strategy involves not only developing plans based on potential risk scenarios but also evaluating those plans on a regular basis.

Learn more about McKinsey’s  Risk and Resilience  Practice.

What are five actions organizations can take to build dynamic risk management?

In the past, some organizations have viewed risk management as a dull, dreary topic, uninteresting for the executive looking to create competitive advantage. But when the risk is particularly severe or sudden, a good risk strategy is about more than competitiveness—it can mean survival. Here are five actions leaders can take to establish risk management capabilities .

• Reset the aspiration for risk management.  This requires clear objectives and clarity on risk levels and appetite. Risk managers should establish dialogues with business leaders to understand how people across the business think about risk, and share possible strategies to nurture informed risk-versus-return decision making—as well as the capabilities available for implementation.
• Establish agile  risk management practices.  As the risk environment becomes more unpredictable, the need for agile risk management grows. In practice, that means putting in place cross-functional teams empowered to make quick decisions about innovating and managing risk.
• Harness the power of data and analytics.  The tools of the digital revolution  can help companies improve risk management. Data streams from traditional and nontraditional sources can broaden and deepen companies’ understandings of risk, and algorithms can boost error detection and drive more accurate predictions.
• Develop risk talent for the future.  Risk managers who are equipped to meet the challenges of the future will need new capabilities and expanded domain knowledge in model risk management , data, analytics, and technology. This will help support a true understanding of the changing risk landscape , which risk leaders can use to effectively counsel their organizations.
• Fortify risk culture.  Risk culture includes the mindsets and behavioral norms that determine an organization’s relationship with risk. A good risk culture allows an organization to respond quickly when threats emerge.

How do scenarios help business leaders understand uncertainty?

Done properly, scenario planning prompts business leaders to convert abstract hypotheses about uncertainties into narratives about realistic visions of the future. Good scenario planning can help decision makers experience new realities  in ways that are intellectual and sensory, as well as rational and emotional. Scenarios have four main features  that can help organizations navigate uncertain times.

• Scenarios expand your thinking.  By developing a range of possible outcomes, each backed with a sequence of events that could lead to them, it’s possible to broaden our thinking. This helps us become ready for the range of possibilities the future might hold—and accept the possibility that change might come more quickly than we expect.
• Scenarios uncover inevitable or likely futures.  A broad scenario-building effort can also point to powerful drivers of change, which can help to predict potential outcomes. In other words, by illuminating critical events from the past, scenario building can point to outcomes that are very likely to happen in the future.
• Scenarios protect against groupthink.  In some large corporations, employees can feel unsafe offering contrarian points of view for fear that they’ll be penalized by management. Scenarios can help companies break out of this trap by providing a “safe haven” for opinions that differ from those of senior leadership and that may run counter to established strategy.
• Scenarios allow people to challenge conventional wisdom.  In large corporations in particular, there’s frequently a strong bias toward the status quo. Scenarios are a nonthreatening way to lay out alternative futures in which assumptions underpinning today’s strategy can be challenged.

Learn more about McKinsey’s Strategy & Corporate Finance  Practice.

What’s the latest thinking on risk for financial institutions?

In late 2021, McKinsey conducted survey-based research with more than 30 chief risk officers (CROs), asking about the current banking environment, risk management practices, and priorities for the future.

According to CROs, banks in the current environment are especially exposed to accelerating market dynamics, climate change, and cybercrime . Sixty-seven percent of CROs surveyed cited the pandemic as having significant impact on employees and in the area of nonfinancial risk. Most believed that these effects would diminish in three years’ time.

Introducing McKinsey Explainers : Direct answers to complex questions

Climate change, on the other hand, is expected to become a larger issue over time. Nearly all respondents cited climate regulation as one of the five most important forces in the financial industry in the coming three years. And 75 percent were concerned about climate-related transition risk: financial and other risks arising from the transformation away from carbon-based energy systems.

And finally, cybercrime was assessed as one of the top risks by most executives, both now and in the future.

Learn more about the risk priorities of banking CROs here .

What is cyber risk?

Cyber risk is a form of business risk. More specifically, it’s the potential for business losses of all kinds  in the digital domain—financial, reputational, operational, productivity related, and regulatory related. While cyber risk originates from threats in the digital realm, it can also cause losses in the physical world, such as damage to operational equipment.

Cyber risk is not the same as a cyberthreat. Cyberthreats are the particular dangers that create the potential for cyber risk. These include privilege escalation (the exploitation of a flaw in a system for the purpose of gaining unauthorized access to resources), vulnerability exploitation (an attack that uses detected vulnerabilities to exploit the host system), or phishing. The risk impact of cyberthreats includes loss of confidentiality, integrity, and availability of digital assets, as well as fraud, financial crime, data loss, or loss of system availability.

In the past, organizations have relied on maturity-based cybersecurity approaches to manage cyber risk. These approaches focus on achieving a particular level of cybersecurity maturity by building capabilities, like establishing a security operations center or implementing multifactor authentication across the organization. A maturity-based approach can still be helpful in some situations, such as for brand-new organizations. But for most institutions, a maturity-based approach can turn into an unmanageably large project, demanding that all aspects of an organization be monitored and analyzed. The reality is that, since some applications are more vulnerable than others, organizations would do better to measure and manage only their most critical vulnerabilities.

What is a risk-based cybersecurity approach?

A risk-based approach is a distinct evolution from a maturity-based approach. For one thing, a risk-based approach identifies risk reduction as the primary goal. This means an organization prioritizes investment based on a cybersecurity program’s effectiveness in reducing risk. Also, a risk-based approach breaks down risk-reduction targets into precise implementation programs with clear alignment all the way up and down an organization. Rather than building controls everywhere, a company can focus on building controls for the worst vulnerabilities.

Here are eight actions that comprise a best practice for developing  a risk-based cybersecurity approach:

• fully embed cybersecurity in the enterprise-risk-management framework
• define the sources of enterprise value across teams, processes, and technologies
• understand the organization’s enterprise-wide vulnerabilities—among people, processes, and technology—internally and for third parties
• understand the relevant “threat actors,” their capabilities, and their intent
• link the controls in “run” activities and “change” programs to the vulnerabilities that they address and determine what new efforts are needed
• map the enterprise risks from the enterprise-risk-management framework, accounting for the threat actors and their capabilities, the enterprise vulnerabilities they seek to exploit, and the security controls of the organization’s cybersecurity run activities and change program
• plot risks against the enterprise-risk appetite; report on how cyber efforts have reduced enterprise risk
• monitor risks and cyber efforts against risk appetite, key cyber risk indicators, and key performance indicators

How can leaders make the right investments in risk management?

Ignoring high-consequence, low-likelihood risks can be catastrophic to an organization—but preparing for everything is too costly. In the case of the COVID-19 crisis, the danger of a global pandemic on this scale was foreseeable, if unexpected. Nevertheless, the vast majority of companies were unprepared: among billion-dollar companies in the United States, more than 50 filed for bankruptcy in 2020.

McKinsey has described the decisions to act on these high-consequence, low-likelihood risks as “ big bets .” The number of these risks is far too large for decision makers to make big bets on all of them. To narrow the list down, the first thing a company can do is to determine which risks could hurt the business versus the risks that could destroy the company. Decision makers should prioritize the potential threats that would cause an existential crisis  for their organization.

To identify these risks, McKinsey recommends using a two-by-two risk grid, situating the potential impact of an event on the whole company against the level of certainty about the impact. This way, risks can be measured against each other, rather than on an absolute scale.

Organizations sometimes survive existential crises. But it can’t be ignored that crises—and missed opportunities—can cause organizations to fail. By measuring the impact of high-impact, low-likelihood risks on core business, leaders can identify and mitigate risks that could imperil the company. What’s more, investing in protecting their value propositions can improve an organization’s overall resilience.

Articles referenced:

• “ Seizing the momentum to build resilience for a future of sustainable inclusive growth ,” February 23, 2023, Børge Brende and Bob Sternfels
• “ Data and analytics innovations to address emerging challenges in credit portfolio management ,” December 23, 2022, Abhishek Anand , Arvind Govindarajan , Luis Nario  and Kirtiman Pathak
• “ Risk and resilience priorities, as told by chief risk officers ,” December 8, 2022, Marc Chiapolino , Filippo Mazzetto, Thomas Poppensieker , Cécile Prinsen, and Dan Williams
• “ What matters most? Six priorities for CEOs in turbulent times ,” November 17, 2022, Homayoun Hatami  and Liz Hilton Segel
• “ Model risk management 2.0 evolves to address continued uncertainty of risk-related events ,” March 9, 2022, Pankaj Kumar, Marie-Paule Laurent, Christophe Rougeaux, and Maribel Tejada
• “ The disaster you could have stopped: Preparing for extraordinary risks ,” December 15, 2020, Fritz Nauck , Ophelia Usher, and Leigh Weiss
• “ Meeting the future: Dynamic risk management for uncertain times ,” November 17, 2020, Ritesh Jain, Fritz Nauck , Thomas Poppensieker , and Olivia White
• “ Risk, resilience, and rebalancing in global value chains ,” August 6, 2020, Susan Lund, James Manyika , Jonathan Woetzel , Edward Barriball , Mekala Krishnan , Knut Alicke , Michael Birshan , Katy George , Sven Smit , Daniel Swan , and Kyle Hutzler
• “ The risk-based approach to cybersecurity ,” October 8, 2019, Jim Boehm , Nick Curcio, Peter Merrath, Lucy Shenton, and Tobias Stähle
• “ Value and resilience through better risk management ,” October 1, 2018, Daniela Gius, Jean-Christophe Mieszala , Ernestos Panayiotou, and Thomas Poppensieker

Want to know more about business risk?

Related articles.

What matters most? Six priorities for CEOs in turbulent times

Creating a technology risk and cyber risk appetite framework

Risk and resilience priorities, as told by chief risk officers

How to Create a Project Risk Management Plan

By Kate Eby | February 27, 2023

• Share on Facebook
• Share on LinkedIn

Link copied

Teams can use a project risk management plan to identify and assess the potential risks to a project. We’ve gathered expert tips on creating an effective risk management plan, as well as step-by-step instructions for creating an example plan.

On this page, you’ll find information on what to include in a project risk management plan and how to create a plan , as well as step-by-step instructions for completing an example project risk management plan .

What Is a Project Risk Management Plan?

Project teams create a project risk management plan , a document that helps identify and assess potential risks to a project. The plan outlines how your team will analyze and mitigate the potential risks to ensure project success.

The project risk management plan is one of the most important documents in project risk management . You can learn more about project risks in general — as well as specific types of project risks — in our comprehensive guides

What Does a Risk Management Plan Cover?

A risk management plan should cover a number of areas detailing potential project risks and how your team will deal with them. It will include a description of the project, along with how your team will identify and assess risk.

At a minimum, your project risk management plan should include the following details:

• Project description, including its purpose
• The team plan for identifying, logging, and assessing potential risks
• How the team will identify broad categories of risk
• How the team will evaluate the severity of each potential risk
• How your team will continue to monitor risks throughout the project
• How team members will be assigned as owners of various risks
• Your organization’s tolerance for certain risks, along with criteria for a risk being too large to accept

“A risk management plan defines how the risks for a project will be handled to ensure that the project can be completed within the set timeframe,” says Veniamin Simonov, Director of Product Management at NAKIVO , a backup and ransomware recovery software vendor. “The plan should cover methodology, risk categorization and prioritization, a response plan, staff roles, and responsibility areas and budgets.”

“The risk management plan will address ‘What are we going to do? How are we going to do it? What are the processes we're going to follow?’” says Alan Zucker, Founding Principal of Project Management Essentials . “It may include things such as what are the major categories you're going to use to define your risks. It might also include some guidelines for assessing risks.”

Components in a Project Risk Management Plan 

A project risk management plan will include certain components and describe how your project team will use certain tools to understand and manage potential risks. Some components include a risk register, a risk breakdown structure, and a risk response plan.

Here are components or tools that a project risk management plan often includes or describes:

• Risk Register: A risk register is the document your project team will use to identify, log, and monitor potential project risks.
• Risk Breakdown Structure: A risk breakdown structure is a chart that allows your team to identify broad risk categories and specific risks that fit within each category. Your team can decide on the broad categories, depending on your project.
• Risk Assessment Matrix: A risk assessment matrix is a chart matrix that allows teams to score the severity of potential risks based on both the likelihood of each risk happening and the impact to the project if a risk happens.
• Risk Response Plan: A risk response plan is a document that details how your team plans to respond to each potential risk to try to either prevent it from happening or lessen the impact if it does happen. You can learn more about project risk mitigation . 
• Roles and Responsibilities: The risk management plan can provide details on the project risk management team, including the lead member for risk management. It also likely details the roles and responsibilities each team member will have in addressing and dealing with specific risks.
• Risk Reporting Formats: The risk management plan describes how the project team will document and report its work on monitoring and dealing with risks. It describes the risk register format that the team will use. It might also describe how risks will be added to or deleted from the register and how the project team will provide periodic summarized risk reports to top project and organization leaders.
• Project Funding and Timing: The plan will likely have a section describing the overall funding and timing for the project. That section also likely details funding for all project risk management work.

To determine what you need to include in your risk management plan, see the following requirements based on project size:

An Organization’s Risk Management Plan Often Doesn’t Change with Projects  

Many risk management experts emphasize that an organization’s project risk management plans might not change much from project to project. That’s because the plan sets out particulars that will be followed for all projects.

“Remember, it's just an approach document that answers the question: How?” says Kris Reynolds, Founder and CEO of Arrowhead Consulting in Tulsa, Oklahoma. “The company or the department as a whole should have a single risk management plan that gets built as you're building your project management methodology. And it’s your Bible. It’s your guidebook. 

“But it isn't going to change across projects,” Reynolds continues. “What changes are the artifacts, including the risk register. But your approach of how you're going to address risk or analyze risk or plan for risk is in the project risk management plan document. As a company or organization, you create that document, and it exists for a year or two years without changing.”

To create a project risk management plan, your team should gather important documents and decide on an approach for assessing and responding to risks. This process involves gathering support documents, listing potential risk management tools, and more. 

Consider some of these basic steps and factors as you begin creating the project risk management plan:

• Gather Supporting Documents: Gather and read through supporting documents related to the overall project, including the project and project management plan. It’s important for your project risk team to have a full view of project goals and objectives.
• Frame the Context: Make sure your team understands both the business value of the project and the impact on the organization if the project fails.
• Decide on Risk Assessment Criteria: Decide how your team will identify and assess important risks. That will require your team to have an understanding of which types of risks your organization can tolerate and which risks could be ruinous to the project.
• Inventory Possible Risk Management Tools: Make a list of risk management tools and documents that your team might use to help identify and manage project risk.
• Known Risks: At the start of a project, team members will be able to identify a number of known risks , such as budget issues, shortages of material, and human and other resource constraints, which are measurable and based on specific events. 
• Unknown Risks: At the start of a project, team members will not be able to identify a range of unknown risks that could impact your project. Those risks are not as easily or objectively measurable as known risks and can crop up at any point during a project. A main goal of project risk management is to help your team discover and address unknown risks before they happen.
• Unknowable Risks: Your team will not be able to anticipate unknowable risks that could affect the project, such as catastrophic weather events, accidents, and major system failures.
• Understand Human Bias: Studies have shown that people overestimate their ability to predict and influence the future. We often think we have more control than we do. Those biases can affect how we assess and manage risks in a project. We tend to give too much credence to what happened with past processes, fall into agreement with others in our group, and be more optimistic than we should be about how long a project will take or how much it will cost.  It’s important to account for all of those biases as your team identifies and assesses project risk.

Steps in Developing a Project Risk Management Plan

After your project team has gathered documents and done other preparation work, you will want to follow nine basic steps in creating a project risk management plan. Those start with identifying and assessing risks.

Here are details on the nine steps of project risk management to keep in mind while drafting your project risk management plan:

• Identify Risks: Your team should gather information and request input from team and organization members to determine potential risks to the project. Some specific risks can threaten many projects. Other risks will vary, based on the type of project and the industry. “If you're talking about a software project, you could have risks associated with the technology, resources, and interdependencies with other systems,” says Zucker. “If you have vendors you're working with, there may be risks associated with the vendors. There may be risks that are software- or hardware-specific. If you're working on a construction project, those risks obviously would be very different. ”You can learn more about project risk analysis and how to identify potential risks to a project .
• Assess Potential Impact of Each Risk: After your team identifies potential risks, it can assess the likelihood of each risk, along with the expected impact on the project if the risk happens. Your team can use a risk matrix to identify both the likelihood and impact of each risk. You can learn more about how to create a risk matrix and assess risks .
• Determine Your Organization's Risk Threshold and Tolerance: Your team will want to understand your organization’s risk threshold , or tolerance for risk. Organization leaders might decide that some risks should be avoided at all costs, while others are acceptable. Take the time to understand those views as you prioritize project risks.
• Prioritize Risks Based on Impact and Risk Tolerance: Once your team assesses the potential impact of a risk and your organization's risk tolerance for risks, it will prioritize risks accordingly. “Prioritize risks based on their disruptive potential for an organization,” says Simonov.
• Create a Risk Response Plan: Your team should then create a response plan for each risk that the team considers a priority. That response plan will include measures that could prevent the risk from happening or lessen the risk’s impact if it does happen.
• Select Project Risk Management Tools: Your team will need to decide on the best risk management tools to use for your project. That will likely include a risk register and a risk assessment matrix. It might include other tools, such as Monte Carlo simulations. Learn more about various tools and documents to use in risk management . 
• Select an Owner for Each Risk: Each identified risk should have an assigned owner. In some cases, a department might be an owner of a risk, but most often, the team will assign individuals to monitor risks. In some cases, the owner will be responsible for dealing with the risk if it happens. Teams can list the owners of each risk on their project risk register. 
• Determine Possible Triggers for Each Risk: As your team conducts a closer assessment of all risks, it should identify risk triggers where possible. Triggers are events that can cause a risk to happen. Your team won’t be able to identify triggers for all risks, but it will for some. For example, if you have a plant without sufficient backup power, a trigger could be warnings of a violent storm that could cause a power outage.
• Determine How Your Team Will Monitor Risks: An important part of your plan includes recording concrete details about how your team will ensure that it can continually monitor risks throughout the life of a project.

Risk Management Plan Examples, Templates, and Components

Examples of project risk management plans can help your team understand what information to include in a plan. The risk management plan can also detail various components that will be part of your team’s risk management.

Project Risk Management Plan Template

Download the Sample Project Risk Management Plan Template for Microsoft Word  

Download this sample project risk management plan, which includes primary components that might be described in a project risk management plan, such as details on risk identification, risk mitigation, and risk tracking and reporting.

Download the Blank Project Risk Management Plan for Microsoft Word

Use this blank template to create your own project risk management plan. The template includes sections to ensure that your team covers all areas of risk management, such as risk identification, risk assessment, and risk mitigation. Customize the template based on your needs.

Project Risk Register Template

Download the Sample Project Risk Register for Excel

This sample project risk register gives your team a better understanding of the information that a risk register should include to help the team understand and deal with risks. This sample includes potential risks that a project manager might track for a construction project.

Download the Blank Project Risk Register Template for Excel  

Use this project risk register template to help your team identify, track, and plan for project risks. The template includes columns for categorizing risks, providing risk descriptions, determining a risk severity score, and more.  

Quantitative Risk Register Template

Download the Sample Quantitative Project Risk Impact Matrix for Excel

This sample quantitative project risk impact matrix template can help your team assess a project risk based on quantitative measures, such as potential monetary cost to the project. The template includes columns where your team can assess and track the probability and potential cost of each project risk. The template calculates a total monetary risk impact based on your estimates of probability and cost.

Risk Breakdown Structure Template

Download the Risk Breakdown Structure Template for Excel

Your team can use this template to create a risk breakdown structure diagram that shows different types of risks that could affect a project. The template helps your team organize risks into broad categories.

Step-By-Step Guide to Creating a Project Risk Management Plan

Below are step-by-step instructions on how to fill out a project risk management plan template. Follow these steps to help you and your team understand the information needed in an effective risk management plan.

This template is based on a project risk management plan template created by Arrowhead Consulting of Tulsa, Oklahoma, and was shared with us by Kris Reynolds.

• Cover Section: Provide information for the cover section , also known as the summary section . This will include the name of the project, the project overview, the project goals, the expected length of the project, and the project manager.
• Risk Management Approach: Write a short summary of your organization's overall approach to project risk management for all projects, not only the project at hand. The summary might describe overall goals, along with your organization’s view of the benefits of good project risk management.
• Plan Purpose: Write a short summary explaining how the plan will help your team perform proper risk management for the project.
• Risk Identification: Provide details on how your team plans to identify and define risks to the project. Those details should include who is assigned to specific responsibilities for risk identification and tracking, as well as what information and categories will be included in your team’s project risk register.
• Risk Assessment: Provide details on how your team will assess the probability and potential impact of each risk it has identified. Your team should also include details on any risk matrices it plans to use and how the team will prioritize risks based on those matrices.
• Risk Response: Provide details on the ways your team can choose to respond to various risks. In the case of high-priority risks, that will include prevention or mitigation plans for each risk. In the case of low-priority risks, or risks that might be prohibitively expensive to mitigate, it might include accepting the risk with limited mitigation measures.
• Risk Mitigation: Provide more details on how your team plans to lessen the likelihood  or impact of each risk. Your team should also provide details on how it will monitor the effectiveness of prevention and mitigation strategies, and change them if needed.
• Risk Tracking and Reporting: Provide details on how your team plans to track and report on risks and risk mitigation activities. These details will likely include information on the project risk register your team plans to use and information on how your team plans to periodically report risk and risk responses to organizational leadership.

Do Complex Projects Require More Complex Project Risk Management Plans? 

Experts say that complex projects shouldn’t require more complex project risk management plans. A project might have more complex tools, such as a more detailed risk register, but the risk management plan should cover the same basics for all projects.

“The problem is, most people get these management plans confused. They then start lumping in the artifacts [such as risk registers] — which can be more complex and have more detail — to the risk management plan itself,” says Reynolds. “You want it to be easily understood and easily followed.

“I don't think the complexity of the project changes the risk management plan,” Reynolds says. “You may have to circulate the plan to more people. You may have to meet more frequently. You may have to use quantitative risk analysis. That would be more complex with more complex projects. But the management plan itself —  no.”

Effectively Manage Project Risks with Real-Time Work Management in Smartsheet

From simple task management and project planning to complex resource and portfolio management, Smartsheet helps you improve collaboration and increase work velocity -- empowering you to get more done. 

The Smartsheet platform makes it easy to plan, capture, manage, and report on work from anywhere, helping your team be more effective and get more done. Report on key metrics and get real-time visibility into work as it happens with roll-up reports, dashboards, and automated workflows built to keep your team connected and informed.

When teams have clarity into the work getting done, there’s no telling how much more they can accomplish in the same amount of time. Try Smartsheet for free, today.

Discover a better way to streamline workflows and eliminate silos for good.

• Sign up for free
• SafetyCulture

Risk Mitigation Plan Template

Free risk mitigation plan templates.

Identify and address potential risks to your organization with a risk mitigation plan template.

• Eliminate paperwork with digital checklists
• Generate reports from completed checklists
• Free to use for up to 10 users

You can use this template for planning mitigation actions to reduce or eliminate risks in your workplace. It allows you to define potential risks and identify solutions to prevent negative impacts on the operations. Use this template to do the following actions:

• Identify and describe potential risks
• Attach photo evidence of the hazards
• Highlight mitigation strategies for each risk
• Assign the right people for the job
• Set a timeline for mitigating hazards
• Estimate mitigation costs
• Determine the actions’ impacts on the project
• Sign off with the manager’s digital signature

What is a Risk Mitigation Plan?

A risk mitigation plan is a tool used to determine specific actions in response to risks. It defines potential threats, assesses their potential impacts, and decides on steps to mitigate their effects. Having this plan on hand helps teams select the best route to reduce the negative impact of risks on their organization and keep them at a minimum or manageable level.

A risk mitigation plan aims to eliminate, manage , or minimize the impact of risks that can negatively affect a project or business. In accomplishing this, it weighs the consequences of each risk, prioritizes them according to their risk levels, and strategizes in response to their impacts. By acknowledging the inevitability of certain threats, teams can plan around those risks to lessen their adverse effects.

A risk mitigation plan offers several advantages to project teams and organizations. It serves as a guide in managing and reducing risks through established procedures. By noting several approaches to risks ahead of time, organizations can better prepare in handling the risks.

Aside from this, having a readily available mitigation plan helps teams reach effective business decisions. Risk mitigation planning allows them to spot loopholes in the processes that could trigger these risks and respond before they worsen. Because they understand the risks and have planned accordingly, teams can achieve their goals and targets.

5 Risk Mitigation Strategies and Their Examples

Risk mitigation involves different methods depending on the likelihood and impact of any given risk. This section discusses the five risk mitigation strategies and examples of how project teams can explore and use them for their operations.

The acceptance strategy begins by acknowledging risks and determining which are acceptable from the pool of threats. By bringing them into attention, a team can reach a common understanding of what these risks entail. Teams can also set a period for accepting these risks to prioritize efforts in mitigating other risks.

For example, they can outline risks that could hinder them from meeting project deadlines.

Teams can also mitigate risks by avoiding exposure to it as much as possible. This type of strategy takes on a preventive approach as opposed to the previous strategy. It lets teams plan steps to avoid threats and their impacts. Teams can avoid risks by adjusting specific project requirements, whether in operations, costs, or scheduling.

For example, they can choose not to participate in certain activities to prevent being exposed to the threat.

The control strategy aims to remove, limit, or manage the impact or likelihood of threats. It carries out actions to reduce the project’s exposure to certain risks.

For example, teams can employ time-tracking and time management tools to monitor how much time it takes to accomplish tasks in a project. Doing so can help them mitigate any risk to the project timeline.

This risk mitigation strategy involves carefully watching potential risks for any noticeable change in their impact. Teams dedicate a specific period to observe indicated risks. If they spot any alarming changes that can negatively impact the project, they can act accordingly.

An example of this is holding periodic updates to assess the status and timeline of tasks.

Transference

Lastly, teams can mitigate risks by handing them over to a willing party. It means transferring the risks and associated consequences to a stakeholder who can deal with them. When doing this, it’s important to make sure that the conditions are acceptable for all the parties involved.

A great example of this is outsourcing providers outside the company for tasks such as customer services.

Components of a Risk Mitigation Plan

A risk mitigation plan template should consist of the following parts:

• List of individual risks
• Short description of each risk
• Risk analysis and rating – according to its likelihood of occurrence and severity of impact
• Root cause analysis – determining the root cause(s) that led to the risk
• Plan of action – identifying which steps to take to mitigate the risk
• Designated person/team
• Timeline for the action plan
• Estimated cost(s) for mitigating the risk

How to Write a Risk Mitigation Plan

After learning about the components of a risk mitigation plan template, it’s time to put them into action. This section walks you through the writing process of a risk mitigation plan and the subsequent steps to take during its implementation.

Identify and describe possible risks.

It should cover all potential threats to the project, from those crucial to the operations to those affecting the team on a broader scale. Present a detailed description of the risk, including its root cause(s) and impact(s) on your project.

Assess the risks.

The next step is to evaluate the risks based on how they impact your project and how likely they will occur. A risk assessment plan enables you to quantify risk levels in your organization. Choose a risk matrix that applies best to your project needs.

Rank them in terms of priority.

This method lets you decide how to respond to each risk and its impact. You can start by establishing a manageable level of risk and defining critical points in your operations. After this, determine the appropriate strategies to respond to those risks.

Monitor the risks.

Risk mitigation planning doesn’t stop when the plan is complete. It’s important to keep an eye on the risks as they change in relevance or impact. Set clear, well-defined metrics to detect any changes in the threats.

Implement and observe progress.

An effective mitigation strategy requires constant re-evaluation and improvement. Periodically revisit the plan’s success in mitigating risks. If the planned approach isn’t working, it’s best to change the course of action.

Featured Risk Mitigation Plan Templates

Risk assessment template.

Use this template to identify and evaluate hazard and control measures in the workplace. Discuss risks in workplace activities, provide photo documentation, and rate them using a risk matrix. Establish control procedures to mitigate the risk and proactively keep your workplace safe with this template.

Risk Management Plan Template

This template lets you define, assess, handle, and track risks throughout the project lifecycle. List down potential threats and rate them according to their seriousness, likelihood, and overall grade. Outline appropriate mitigation strategies, provide sufficient documentation and monitor risks over time using the template.

ISO 31000 Risk Management Template

Use this template to assess your readiness to comply with ISO 31000:2018’s risk management standards. Customize this template, its scoring, and response sets according to your business needs. Find and bridge any gaps in your workplace protocols, define strategies to reduce threats, and establish a robust risk management system with this tool.

Leizel Estrellas

Explore more templates

• View template in library

Related pages

• Hazard Assessment Software
• Process Hazard Analysis Software
• EHS Risk Assessment Software
• Integrated Risk Management Software
• Operational Risk Management Software
• Reputational Risk
• Reputation Management
• Environmental Aspects and Impacts
• Risk Mitigation Strategies
• Risk Assessment Examples
• Safety Improvement Plan Template
• Contract Risk Assessment Checklist
• Point of Work Risk Assessment Template
• 7 Best Risk Assessment Templates
• 5×5 Risk Matrix Template

• Search Search Please fill out this field.

What Is Risk Control?

How risk control works, utilizing a risk and control matrix (racm) for effective risk management, examples of risk control, the bottom line.

• Trading Skills
• Risk Management

Risk Control: What It Is, How It Works, Example

Investopedia / Sabrina Jiang

Risk control is the set of methods by which firms evaluate potential losses and take action to reduce or eliminate such threats. It is a technique that utilizes findings from risk assessments , which involve identifying potential risk factors in a company's operations, such as technical and non-technical aspects of the business, financial policies and other issues that may affect the well-being of the firm.

Risk control also implements proactive changes to reduce risk in these areas. Risk control thus helps companies limit loss. Risk control is a key component of a company's enterprise risk management (ERM) protocol.

Key Takeaways

• Risk control is the set of methods by which firms evaluate potential losses and take action to reduce or eliminate such threats. It is a technique that utilizes findings from risk assessments.
• The goal is to identify and reduce potential risk factors in a company's operations, such as technical and non-technical aspects of the business, financial policies and other issues that may affect the well-being of the firm.
• Risk control methods include avoidance, loss prevention, loss reduction, separation, duplication, and diversification.

Modern businesses face a diverse collection of obstacles, competitors, and potential dangers. Risk control is a plan-based business strategy that aims to identify, assess, and prepare for any dangers, hazards, and other potentials for disaster—both physical and figurative—that may interfere with an organization's operations and objectives. The core concepts of risk control include:

• Avoidance is the best method of loss control. For example, after discovering that a chemical used in manufacturing a company’s goods is dangerous for the workers, a factory owner finds a safe substitute chemical to protect the workers’ health. Avoidance, however, is not always possible.
• Loss prevention accepts a risk but attempts to minimize the loss rather than eliminate it. For example, inventory stored in a warehouse is susceptible to theft. Since there is no way to avoid it, a loss prevention program is put in place. The program includes patrolling security guards, video cameras and secured storage facilities. Insurance is another example of risk prevention that is outsourced to a third party by contract.
• Loss reduction accepts the risk and seeks to limit losses when a threat occurs. For example, a company storing flammable material in a warehouse installs state-of-the-art water sprinklers for minimizing damage in case of fire.
• Separation involves dispersing key assets so that catastrophic events at one location affect the business only at that location. If all assets were in the same place, the business would face more serious issues. For example, a company utilizes a geographically diverse workforce so that production may continue when issues arise at one warehouse.
• Duplication involves creating a backup plan, often by using technology. For example, because information system server failure would stop a company’s operations, a backup server is readily available in case the primary server fails.
• Diversification allocates business resources for creating multiple lines of business offering a variety of products or services in different industries. A significant revenue loss from one line will not result in irreparable harm to the company’s bottom line. For example, in addition to serving food, a restaurant has grocery stores carry its line of salad dressings, marinades, and sauces.

No one risk control technique will be a golden bullet to keep a company free from potential harm. In practice, these techniques are used in tandem with others to varying degrees and will change as the corporation grows, as the economy changes, and as the competitive landscape shifts.

A Risk and Control Matrix (RACM) is a valuable tool used by organizations to better understand and optimize their risk profiles. It is a structured approach that helps companies identify, assess, and manage risks by mapping the relationships between potential risks and the corresponding control measures implemented to mitigate them. The RACM allows organizations to visualize and evaluate the effectiveness of their risk control strategies and make data-driven decisions to enhance their risk management practices.

The RACM typically includes the following components:

• Risk identification : The matrix lists all the potential risks an organization may face, often categorized by business areas, processes, or functions.
• Risk assessment : Each identified risk is assessed based on its likelihood of occurrence and potential impact on the organization. This assessment helps prioritize risks and focus resources on the most critical areas.
• Control measures : For each risk, the matrix outlines the specific control measures implemented to mitigate or reduce the likelihood and impact of the risk. These measures can include policies, procedures, systems, or other mechanisms designed to manage the risk.
• Control effectiveness : The RACM evaluates the effectiveness of each control measure, taking into account factors such as the level of compliance, the adequacy of the control design, and the control's ability to detect or prevent the risk from materializing.
• Action plans : Based on the assessment of control effectiveness, the matrix may include action plans for improving risk control measures or addressing identified gaps in the organization's risk management practices.

By creating and maintaining an up-to-date RACM, organizations can gain a comprehensive understanding of their risk landscape and the effectiveness of their risk control measures. This information can inform strategic decision-making, guide resource allocation, and support continuous improvement in risk management practices.

RCAM Example

This RCAM example outlines different risk categories, such as Finance, HR, Operations, and IT, and includes specific risks within each category. The likelihood and impact of each risk are assessed, leading to an overall risk rating. Control measures are then listed, along with an evaluation of their effectiveness. Finally, action plans are proposed to enhance risk control measures or address identified gaps in risk management.

Keep in mind that this is just a simplified example, and an actual RACM for an organization would likely be more detailed and cover a broader range of risks and controls.

Sumitomo Electric and Disaster Resilience

As part of Sumitomo Electric’s risk management efforts, the company developed business continuity plans (BCPs) in fiscal 2008 as a means of ensuring that core business activities could continue in the event of a disaster. The BCPs played a role in responding to issues caused by the Great East Japan earthquake that occurred in March 2011. Because the quake caused massive damage on an unprecedented scale, far surpassing the damage assumed in the BCPs, some areas of the plans did not reach their goals.

Based on lessons learned from the company’s response to the earthquake, executives continue promoting practical drills and training programs, confirming the effectiveness of the plans and improving them as needed.

British Petroleum Oil Spill

British Petroleum (BP) has implemented several risk control measures following the Deepwater Horizon oil spill in 2010, which was one of the largest environmental disasters in history. As a result of the spill, BP was subject to a $20.8 billion settlement with the U.S. government and five Gulf states in 2015. The company has since strengthened its risk management approach to prevent similar incidents in the future.

BP has focused on improving its safety culture, including conducting regular safety training and drills for employees, investing in advanced technology for better monitoring and control of drilling operations, and implementing rigorous safety standards across its global operations. The company has also adopted a systematic approach to risk assessment and management, which involves identifying, evaluating, and prioritizing risks and developing tailored risk control strategies to mitigate potential impacts.

Moreover, BP has increased its efforts to promote transparency and stakeholder engagement. The company now publishes an annual sustainability report that provides detailed information on its safety, environmental, and social performance, as well as its progress in implementing risk control measures. This openness allows stakeholders to hold the company accountable for its actions and fosters a culture of continuous improvement in risk management.

Starbucks' Supply Chain

Starbucks, a leading global coffee retailer, has implemented various risk control measures to manage its supply chain risks. The company sources coffee beans from multiple regions worldwide, making it vulnerable to fluctuations in supply and potential disruptions due to weather, political instability, or other unforeseen events.

To address these risks, Starbucks has adopted a diversified sourcing strategy, which involves procuring coffee beans from a wide range of suppliers across different regions. This approach helps the company reduce its reliance on any single supplier or region, ensuring a steady supply of raw materials and minimizing the impact of potential disruptions.

Furthermore, Starbucks has established a comprehensive set of supply chain standards, known as the Coffee and Farmer Equity (C.A.F.E.) Practices. These standards cover various aspects of coffee production, including quality, environmental sustainability, and social responsibility. By working closely with its suppliers and conducting regular audits, Starbucks can ensure compliance with these standards, thereby minimizing the risk of reputational damage and potential supply chain disruptions.

In addition, Starbucks uses advanced supply chain management software to monitor its global supply chain in real-time, enabling the company to identify potential risks early and take appropriate action to mitigate them. This proactive approach to risk control has helped Starbucks maintain its reputation for high-quality coffee and build a resilient, sustainable supply chain that supports its continued growth.

How Does Risk Control Differ from Risk Management?

Risk control is a subset of risk management. While risk management is the overarching process of identifying, assessing, and prioritizing risks to an organization, risk control focuses specifically on implementing strategies to mitigate or eliminate the identified risks. Risk management typically involves the development of an overall risk management plan, whereas risk control addresses the techniques and tactics employed to minimize potential losses and protect the organization.

Can a Company Eliminate All of Its Risks Through Risk Control?

No, it is not possible to eliminate all risks completely. Risk control aims to minimize and manage risks, but it cannot remove them entirely. Some risks are inherent in the business environment or the nature of the industry, while others may arise from unforeseen circumstances. The goal of risk control is to reduce the likelihood and potential impact of risks on the organization, helping to build resilience and maintain stability in the face of uncertainty.

How Can Companies Identify Emerging Risks?

Emerging risks can be challenging to identify, as they often involve novel or rapidly changing situations. Companies can employ various strategies to detect and monitor emerging risks, such as:

• Keeping up-to-date on industry trends, news, and research to identify potential risks on the horizon.
• Engaging in scenario planning to consider possible future developments and their implications for the organization.
• Utilizing big data analytics and artificial intelligence tools to analyze large datasets and identify patterns or trends that may signal emerging risks.
• Encouraging a culture of open communication and collaboration, enabling employees to share insights and concerns about potential risks.
• Establishing a dedicated risk management team responsible for monitoring and responding to emerging risks.

How Does Risk Control Relate to Corporate Social Responsibility?

Risk control and corporate social responsibility (CSR) are interconnected in several ways. By implementing risk control measures, companies can minimize potential harm to stakeholders, such as employees, customers, and the environment. This proactive approach to risk management aligns with the principles of CSR, which emphasize the importance of ethical and sustainable business practices. Additionally, effective risk control can help protect a company's reputation and maintain public trust, which are crucial aspects of CSR. In short, risk control is an essential component of a comprehensive CSR strategy, as it helps companies meet their social, environmental, and ethical obligations while ensuring long-term success and sustainability.

Risk control is a critical part of modern business management, enabling companies to identify, assess, and mitigate potential hazards and threats to their operations and objectives. By implementing a combination of risk control techniques, such as avoidance, loss prevention, loss reduction, separation, duplication, and diversification, businesses can minimize their exposure to risks and enhance their resilience. Real-world examples, such as British Petroleum's post-Deepwater Horizon safety measures and Starbucks' supply chain management strategies, demonstrate the importance and effectiveness of robust risk control measures. As the business environment continues to evolve, companies must remain vigilant and adaptive in their risk control efforts to ensure long-term success and sustainability.

Sumitomo Electric. " Risk Management ."

NOAA. " Deepwater Horizon oil spill settlements: Where the money went ."

NC State University. " How Did BP’s Risk Management Lead to Failure ?"

Reuters. " Slack management exposed BP to high safety risk -leaked report ."

British Petroleum. " Safety and Operational Risk Update ."

SKF Corp. " Starbucks: An analysis of supply chain risk and mitigation strategies ."

New York Times. " Starbucks, Flush With Customers, Is Running Low on Ingredients. "

Solatech. " Starbucks: An analysis of supply chain risk and mitigation strategies ."

Harvard University. " Starbucks global supply chain and climate change ."

Supply Chain Drive. " Starbucks’ real-time alerts allow for disruption response in days, not weeks ."

• Terms of Service
• Editorial Policy
• Privacy Policy

Press Releases

Intel reports second-quarter 2024 financial results; announces $10 billion cost reduction plan to increase efficiency and market competitiveness, related documents.

NEWS SUMMARY

• Second-quarter revenue of $12.8 billion, down 1% year over year (YoY).
• Second-quarter GAAP earnings (loss) per share (EPS) attributable to Intel was $(0.38); non-GAAP EPS attributable to Intel was $0.02.
• Forecasting third-quarter 2024 revenue of $12.5 billion to $13.5 billion; expecting third-quarter GAAP EPS attributable to Intel of $(0.24); non-GAAP EPS attributable to Intel of $(0.03).
• Implementing comprehensive reduction in spending, including a more than 15% headcount reduction, to resize and refocus.
• Suspending dividend starting in the fourth quarter of 2024. The company reiterates its long-term commitment to a competitive dividend as cash flows improve to sustainably higher levels.
• Achieved key milestones on Intel 18A with the 1.0 Process Design Kit (PDK) released and key power-on of first client and server products on Intel 18A, Panther Lake and Clearwater Forest.

SANTA CLARA, Calif.--(BUSINESS WIRE)-- Intel Corporation today reported second-quarter 2024 financial results.

“Our Q2 financial performance was disappointing, even as we hit key product and process technology milestones. Second-half trends are more challenging than we previously expected, and we are leveraging our new operating model to take decisive actions that will improve operating and capital efficiencies while accelerating our IDM 2.0 transformation,” said Pat Gelsinger, Intel CEO. “These actions, combined with the launch of Intel 18A next year to regain process technology leadership, will strengthen our position in the market, improve our profitability and create shareholder value.”

“Second-quarter results were impacted by gross margin headwinds from the accelerated ramp of our AI PC product, higher than typical charges related to non-core businesses and the impact from unused capacity,” said David Zinsner, Intel CFO. “By implementing our spending reductions, we are taking proactive steps to improve our profits and strengthen our balance sheet. We expect these actions to meaningfully improve liquidity and reduce our debt balance while enabling us to make the right investments to drive long-term value for shareholders.”

Cost-Reduction Plan

As Intel nears the completion of rebuilding a sustainable engine of process technology leadership, it announced a series of initiatives to create a sustainable financial engine that accelerates profitable growth, enables further operational efficiency and agility, and creates capacity for ongoing strategic investment in technology and manufacturing leadership. These initiatives follow the establishment of separate financial reporting for Intel Products and Intel Foundry, which provides a "clean sheet" view of the business and has uncovered significant opportunities to drive meaningful operational and cost efficiencies. The actions include structural and operating realignment across the company, headcount reductions, and operating expense and capital expenditure reductions of more than $10 billion in 2025 compared to previous estimates. As a result of these actions, Intel aims to achieve clear line of sight toward a sustainable business model with the ongoing financial resources and liquidity needed to support the company’s long-term strategy.

The plan will enable the next phase of the company’s multiyear transformation strategy, and is focused on four key priorities:

• Reducing Operating Expenses: The company will streamline its operations and meaningfully cut spending and headcount, reducing non-GAAP R&D and marketing, general and administrative (MG&A) to approximately $20 billion in 2024 and approximately $17.5 billion in 2025, with further reductions expected in 2026. Intel expects to reduce headcount by greater than 15% with the majority completed by the end of 2024.
• Reducing Capital Expenditures: With the end of its historic five-nodes-in-four-years journey firmly in sight, Intel is now shifting its focus toward capital efficiency and investment levels aligned to market requirements. This will reduce gross capital expenditures* in 2024 by more than 20% from prior projections, bringing gross capital expenditures in 2024 to between $25 billion and $27 billion. Intel expects net capital spending* in 2024 of between $11 billion and $13 billion. In 2025, the company is targeting gross capital expenditures between $20 billion and $23 billion and net capital spending between $12 billion and $14 billion.
• Reducing Cost of Sales: The company expects to generate $1 billion in savings in non-variable cost of sales in 2025. Product mix will continue to be a headwind next year, contributing to modest YoY improvements to 2025's gross margin.
• Maintaining Core Investments to Execute Strategy: The company continues to advance its long-term innovation and path to leadership across process technology and products, and the increased efficiency from its actions is expected to further support its execution. In addition, Intel continues to sustain investments to build a resilient and sustainable semiconductor supply chain in the United States and around the world.

Intel is taking the added step of suspending the dividend starting in the fourth quarter, recognizing the importance of prioritizing liquidity to support the investments needed to execute its strategy. The company reiterates its long-term commitment to a competitive dividend as cash flows improve to sustainably higher levels.

Q2 2024 Financial Highlights

In the second quarter, the company generated $2.3 billion in cash from operations and paid dividends of $0.5 billion.

Business Unit Summary

Intel previously announced the implementation of an internal foundry operating model, which took effect in the first quarter of 2024 and created a foundry relationship between its Intel Products business (collectively CCG, DCAI and NEX) and its Intel Foundry business (including Foundry Technology Development, Foundry Manufacturing and Supply Chain, and Foundry Services (formerly IFS)). The foundry operating model is a key component of the company's strategy and is designed to reshape operational dynamics and drive greater transparency, accountability, and focus on costs and efficiency. The company also previously announced its intent to operate Altera ® as a standalone business beginning in the first quarter of 2024. Altera was previously included in DCAI's segment results. As a result of these changes, the company modified its segment reporting in the first quarter of 2024 to align to this new operating model. All prior-period segment data has been retrospectively adjusted to reflect the way the company internally receives information and manages and monitors its operating segment performance starting in fiscal year 2024. There are no changes to Intel’s consolidated financial statements for any prior periods.

Intel Products Highlights

• CCG: Intel continues to define and drive the AI PC category, shipping more than 15 million AI PCs since December 2023, far more than all of Intel's competitors combined, and on track to ship more than 40 million AI PCs by year-end. Lunar Lake, the company’s next-generation AI CPU, achieved production release in July 2024, ahead of schedule, with shipments starting in the third quarter. Lunar Lake will power over 80 new Copilot+ PCs across more than 20 OEMs.
• DCAI: More than 130 million Intel ® Xeon ® processors power data centers around the world today, and at Computex Intel introduced its next-generation Intel ® Xeon ® 6 processor with Efficient-cores (E-cores), code-named Sierra Forest, marking the company’s first Intel 3 server product architected for high-density, scale-out workloads. Intel expects Intel ® Xeon ® 6 processors with Performance-cores (P-cores), code-named Granite Rapids, to begin shipping in the third quarter of 2024. The Intel ® Gaudi ® 3 AI accelerator is also on track to launch in the third quarter and is expected to deliver roughly two-times the performance per dollar on both inference and training versus the leading competitor.
• NEX: Intel announced an array of AI-optimized scale-out Ethernet solutions, including the Intel AI network interface card and foundry chiplets that will launch next year. New infrastructure processing unit (IPU) adaptors for the enterprise are now broadly available and supported by Dell Technologies, Red Hat and others. IPUs will play an increasingly important role in Intel’s accelerator portfolio, which the company expects will help drive AI data center growth and profitability in 2025 and beyond. Additionally, Intel and others announced the creation of the Ultra Accelerator Link, a new industry standard dedicated to advancing high-speed, low-latency communication for scale-up AI systems communication in data centers.

Intel Foundry Highlights

• Intel is nearing the completion of its promised five-nodes-in-four-years strategy, with Intel 18A on track to be manufacturing-ready by the end of this year and production wafer start volumes in the first half of 2025. In July 2024, Intel released to foundry customers the 1.0 PDK for Intel 18A. The company’s first two Intel 18A products, Panther Lake for client — the first microprocessor to use RibbonFet, PowerVia and advanced packaging — and Clearwater Forest for servers, are on track to launch in 2025.
• Ansys, Cadence, Siemens, and Synopsys announced the availability of reference flows for Intel’s embedded multi-die interconnect bridge (EMIB) advanced packaging technology, which simplifies the design process and offers design flexibility. The companies also declared readiness for Intel 18A designs.
• During the quarter, Intel named industry veteran Kevin O'Buckley to lead Foundry Services. The company also recently appointed Dr. Naga Chandrasekaran to lead Intel Foundry Manufacturing and Supply Chain. Their leadership will support Intel’s continued development of the first systems foundry for the AI era.

Other Highlights

Intel announced its second Semiconductor Co-Investment Program (SCIP) agreement, the formation of a joint venture with Apollo related to Intel’s Fab 34 in Ireland. SCIP is an element of Intel’s Smart Capital strategy, a funding approach designed to create financial flexibility to accelerate the company’s strategy, including investing in its global manufacturing operations, while maintaining a strong balance sheet.

Q3 2024 Dividend

The company announced that its board of directors has declared a quarterly dividend of $0.125 per share on the company’s common stock, which will be payable Sept. 1, 2024, to shareholders of record as of Aug. 7, 2024.

As noted earlier, Intel is suspending the dividend starting in the fourth quarter.

Business Outlook

Intel's guidance for the third quarter of 2024 includes both GAAP and non-GAAP estimates as follows:

Reconciliations between GAAP and non-GAAP financial measures are included below. Actual results may differ materially from Intel’s business outlook as a result of, among other things, the factors described under “Forward-Looking Statements” below. The gross margin and EPS outlook are based on the mid-point of the revenue range.

Earnings Webcast

Intel will hold a public webcast at 2 p.m. PDT today to discuss the results for its second quarter of 2024. The live public webcast can be accessed on Intel's Investor Relations website at www.intc.com . The corresponding earnings presentation and webcast replay will also be available on the site.

Forward-Looking Statements

This release contains forward-looking statements that involve a number of risks and uncertainties. Words such as "accelerate", "achieve", "aim", "ambitions", "anticipate", "believe", "committed", "continue", "could", "designed", "estimate", "expect", "forecast", "future", "goals", "grow", "guidance", "intend", "likely", "may", "might", "milestones", "next generation", "objective", "on track", "opportunity", "outlook", "pending", "plan", "position", "possible", "potential", "predict", "progress", "ramp", "roadmap", "seek", "should", "strive", "targets", "to be", "upcoming", "will", "would", and variations of such words and similar expressions are intended to identify such forward-looking statements, which may include statements regarding:

• our business plans and strategy and anticipated benefits therefrom, including with respect to our IDM 2.0 strategy, Smart Capital strategy, partnerships with Apollo and Brookfield, internal foundry model, updated reporting structure, and AI strategy;
• projections of our future financial performance, including future revenue, gross margins, capital expenditures, and cash flows;
• projected costs and yield trends;
• future cash requirements, the availability, uses, sufficiency, and cost of capital resources, and sources of funding, including for future capital and R&D investments and for returns to stockholders, such as stock repurchases and dividends, and credit ratings expectations;
• future products, services, and technologies, and the expected goals, timeline, ramps, progress, availability, production, regulation, and benefits of such products, services, and technologies, including future process nodes and packaging technology, product roadmaps, schedules, future product architectures, expectations regarding process performance, per-watt parity, and metrics, and expectations regarding product and process leadership;
• investment plans and impacts of investment plans, including in the US and abroad;
• internal and external manufacturing plans, including future internal manufacturing volumes, manufacturing expansion plans and the financing therefor, and external foundry usage;
• future production capacity and product supply;
• supply expectations, including regarding constraints, limitations, pricing, and industry shortages;
• plans and goals related to Intel's foundry business, including with respect to anticipated customers, future manufacturing capacity and service, technology, and IP offerings;
• expected timing and impact of acquisitions, divestitures, and other significant transactions, including the sale of our NAND memory business;
• expected completion and impacts of restructuring activities and cost-saving or efficiency initiatives;
• future social and environmental performance goals, measures, strategies, and results;
• our anticipated growth, future market share, and trends in our businesses and operations;
• projected growth and trends in markets relevant to our businesses;
• anticipated trends and impacts related to industry component, substrate, and foundry capacity utilization, shortages, and constraints;
• expectations regarding government incentives;
• future technology trends and developments, such as AI;
• future macro environmental and economic conditions;
• geopolitical tensions and conflicts and their potential impact on our business;
• tax- and accounting-related expectations;
• expectations regarding our relationships with certain sanctioned parties; and
• other characterizations of future events or circumstances.

Such statements involve many risks and uncertainties that could cause our actual results to differ materially from those expressed or implied, including those associated with:

• the high level of competition and rapid technological change in our industry;
• the significant long-term and inherently risky investments we are making in R&D and manufacturing facilities that may not realize a favorable return;
• the complexities and uncertainties in developing and implementing new semiconductor products and manufacturing process technologies;
• our ability to time and scale our capital investments appropriately and successfully secure favorable alternative financing arrangements and government grants;
• implementing new business strategies and investing in new businesses and technologies;
• changes in demand for our products;
• macroeconomic conditions and geopolitical tensions and conflicts, including geopolitical and trade tensions between the US and China, the impacts of Russia's war on Ukraine, tensions and conflict affecting Israel and the Middle East, and rising tensions between mainland China and Taiwan;
• the evolving market for products with AI capabilities;
• our complex global supply chain, including from disruptions, delays, trade tensions and conflicts, or shortages;
• product defects, errata and other product issues, particularly as we develop next-generation products and implement next-generation manufacturing process technologies;
• potential security vulnerabilities in our products;
• increasing and evolving cybersecurity threats and privacy risks;
• IP risks including related litigation and regulatory proceedings;
• the need to attract, retain, and motivate key talent;
• strategic transactions and investments;
• sales-related risks, including customer concentration and the use of distributors and other third parties;
• our significantly reduced return of capital in recent years;
• our debt obligations and our ability to access sources of capital;
• complex and evolving laws and regulations across many jurisdictions;
• fluctuations in currency exchange rates;
• changes in our effective tax rate;
• catastrophic events;
• environmental, health, safety, and product regulations;
• our initiatives and new legal requirements with respect to corporate responsibility matters; and
• other risks and uncertainties described in this release, our 2023 Form 10-K, and our other filings with the SEC.

Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Readers are urged to carefully review and consider the various disclosures made in this release and in other documents we file from time to time with the SEC that disclose risks and uncertainties that may affect our business.

Unless specifically indicated otherwise, the forward-looking statements in this release do not reflect the potential impact of any divestitures, mergers, acquisitions, or other business combinations that have not been completed as of the date of this filing. In addition, the forward-looking statements in this release are based on management's expectations as of the date of this release, unless an earlier date is specified, including expectations based on third-party information and projections that management believes to be reputable. We do not undertake, and expressly disclaim any duty, to update such statements, whether as a result of new information, new developments, or otherwise, except to the extent that disclosure may be required by law.

About Intel

Intel (Nasdaq: INTC) is an industry leader, creating world-changing technology that enables global progress and enriches lives. Inspired by Moore’s Law, we continuously work to advance the design and manufacturing of semiconductors to help address our customers’ greatest challenges. By embedding intelligence in the cloud, network, edge and every kind of computing device, we unleash the potential of data to transform business and society for the better. To learn more about Intel’s innovations, go to newsroom.intel.com and intel.com.

© Intel Corporation. Intel, the Intel logo, and other Intel marks are trademarks of Intel Corporation or its subsidiaries. Other names and brands may be claimed as the property of others.

For information about our operating segments, including the nature of segment revenues and expenses, and a reconciliation of our operating segment revenue and operating income (loss) to our consolidated results, refer to our Form 10-K filed on January 26, 2024, Form 8-K furnished on April 2, 2024 and 10-Q filed on August 1, 2024.

Intel Corporation Explanation of Non-GAAP Measures

In addition to disclosing financial results in accordance with US GAAP, this document contains references to the non-GAAP financial measures below. We believe these non-GAAP financial measures provide investors with useful supplemental information about our operating performance, enable comparison of financial trends and results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business and measuring our performance. Some of these non-GAAP financial measures are used in our performance-based RSUs and our cash bonus plans.

Our non-GAAP financial measures reflect adjustments based on one or more of the following items, as well as the related income tax effects. Income tax effects are calculated using a fixed long-term projected tax rate of 13% across all adjustments. We project this long-term non-GAAP tax rate on at least an annual basis using a five-year non-GAAP financial projection that excludes the income tax effects of each adjustment. The projected non-GAAP tax rate also considers factors such as our tax structure, our tax positions in various jurisdictions, and key legislation in significant jurisdictions where we operate. This long-term non-GAAP tax rate may be subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in our geographic earnings mix, or changes to our strategy or business operations. Management uses this non-GAAP tax rate in managing internal short- and long-term operating plans and in evaluating our performance; we believe this approach facilitates comparison of our operating results and provides useful evaluation of our current operating performance.

Our non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with US GAAP, and the financial results calculated in accordance with US GAAP and reconciliations from these results should be carefully evaluated.

Intel Corporation Supplemental Reconciliations of GAAP Actuals to Non-GAAP Actuals

Set forth below are reconciliations of the non-GAAP financial measure to the most directly comparable US GAAP financial measure. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with US GAAP, and the reconciliations from US GAAP to Non-GAAP actuals should be carefully evaluated. Please refer to "Explanation of Non-GAAP Measures" in this document for a detailed explanation of the adjustments made to the comparable US GAAP measures, the ways management uses the non-GAAP measures, and the reasons why management believes the non-GAAP measures provide useful information for investors.

Intel Corporation Supplemental Reconciliations of GAAP Outlook to Non-GAAP Outlook

Set forth below are reconciliations of the non-GAAP financial measure to the most directly comparable US GAAP financial measure. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with US GAAP, and the financial outlook prepared in accordance with US GAAP and the reconciliations from this Business Outlook should be carefully evaluated. Please refer to "Explanation of Non-GAAP Measures" in this document for a detailed explanation of the adjustments made to the comparable US GAAP measures, the ways management uses the non-GAAP measures, and the reasons why management believes the non-GAAP measures provide useful information for investors.

Intel Corporation Supplemental Reconciliations of Other GAAP to Non-GAAP Forward-Looking Estimates

Set forth below are reconciliations of the non-GAAP financial measure to the most directly comparable US GAAP financial measure. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with US GAAP, and the reconciliations should be carefully evaluated. Please refer to "Explanation of Non-GAAP Measures" in this document for a detailed explanation of the adjustments made to the comparable US GAAP measures, the ways management uses the non-GAAP measures, and the reasons why management believes the non-GAAP measures provide useful information for investors.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240801042170/en/

Kylie Altman Investor Relations 1-916-356-0320 [email protected] Penny Bruce Media Relations 1-408-893-0601 [email protected]

Source: Intel Corporation

Released Aug 1, 2024 • 4:01 PM EDT

• Email Alerts
• RSS News Feed

L.A. consumer group calls FAIR Plan insurance reforms an industry ‘bailout’

• Copy Link URL Copied!

A new law that could force homeowners across California to cover billions of dollars of insurer losses caused by a catastrophic wildfire is generating pushback from a leading consumer group, which has called it an industry “bailout.”

State Insurance Commissioner Ricardo Lara announced Friday he had reached an agreement with the California FAIR Plan that would allow losses suffered by the state’s insurer of last resort to be recouped by surcharges on residential and commercial insurance policies statewide in an “extreme worst case scenario.”

The FAIR Plan, which insures property owners who cannot get or afford traditional policies, is backed by licensed insurers such as State Farm and Allstate. As the program is structured, they are on the hook to pay claims if the FAIR Plan runs through its reserves, reinsurance and catastrophe bonds.

California’s home insurance crisis: What went wrong, how it can be fixed and what owners can do

Major insurers have pulled back from California’s homeowners market, citing wildfires, inflation and other challenges. But there are steps at-risk homeowners can take now to secure coverage and at lower prices.

March 29, 2024

Under Lara’s agreement, if that happens the insurers would be required to cover up to $2 billion in FAIR Plan claims — $1 billion for residential and $1 billion for commercial claims. They could then temporarily surcharge their own policyholders for half of what they are assessed with the approval of the insurance commissioner.

Homeowners would not be surcharged for commercial losses — only holders of commercial policies would be. The agreement also allows insurers to temporarily surcharge policyholders for 100% of claims in excess of those amounts with the approval of the insurance commissioner.

“It’s outrageous and outside the law for the insurance commissioner to force consumers to bail out home insurance companies and then call that consumer protection,” said Carmen Balber, executive director of Los Angeles-based Consumer Watchdog .

Gabriel Sanchez, Lara’s press secretary, defended the agreement, saying, “It would be easy to listen to the elites and the entrenched interests defending a system that clearly isn’t working. Commissioner Lara is focused on hearing from the public, following the data and creating realistic, long-lasting solutions for everyone in this state.”

The FAIR Plan assessment is the latest element of Lara’s Sustainable Insurance Strategy, a package of executive actions intended to stabilize the California market, which has seen insurers stop writing new policies and decline to renew existing policies amid a sharp increase in claims for wildfires damage.

Just this week, firefighters are battling the massive Park fire in Butte, Tehama and Shasta counties, where 100 structures have been destroyed, 4,200 were threatened and 26,000 people were forced to evacuate as of Monday. It is the sixth-largest fire in state history.

Is this the solution to California’s soaring insurance prices due to wildfire risk?

The insurance industry will soon have the ability to use wildfire models when setting rates. Homeowners in high risk areas already know how these models have made policies hard to get and hard to afford.

July 26, 2024

As insurers have pulled back from high-fire risk neighborhoods, the number of residential FAIR Plan policies has more than doubled since 2019 to about 408,000 as of June. Commercial policies similarly increased to 11,026.

The FAIR Plan has a market share under 4%. Policyholders are concentrated in canyons, hillsides and other high-risk neighborhoods, vulnerable to fire and catastrophic insurance losses. The plan’s loss exposure was $393 billion as of June, even though the plan’s policies are more limited than those available through the regular commercial market.

Lara said Friday in a release announcing the agreement that “modernizing the FAIR Plan is a crucial step in our strategy to stabilize California’s insurance market.”

The FAIR Plan’s financial risk is overwhelmingly due to its residential policies, which account for about 95% of its $393 billion in total loss exposure, according to the insurer.

The Insurance Department downplayed a worst-case scenario, noting that even the 2018 Camp fire in Butte County that ravaged the town of Paradise, destroying or damaging more than 19,000 structures and causing some $16.5 billion in damage , did not deplete the FAIR Plan’s reserves.

The Insurance Department contended that the agreement was actually favorable to consumers because under current law there is nothing prohibiting the insurers from seeking policyholder assessments on all FAIR Plan losses they must cover.

“The agreement ... requires insurance companies to share the burden, something not clearly outlined before. That protects consumers by providing predictability which leads to stability,” Sanchez said.

Balber disputed that reading of the law and said Lara has not been able to get legislative authority for the insurer policyholder assessments, so he proceeded under questionable executive authority. “We have several questions about the legality of this proposal and are looking into it,” she said.

Consumer Watchdog has called for requiring insurers to offer policies in wildfire-prone neighborhoods to homeowners who have taken steps to reduce fire risks on their property as the best method to reduce enrollment in the FAIR Plan and stabilize the state’s insurance market.

Another key element of Lara’s FAIR Plan reforms call for the insurer to offer greater commercial coverage — up to $20 million per structure and $100 million for any one location.

Dan Dunmoyer, chief executive of the California Building Industry Assn., said the trade group has been seeking higher commercial coverage limits due to the rise of insurance premiums, which have slowed the construction of condominium complexes that builders insure.

He estimated that astronomical insurance rate increases have slowed condo construction by about 70% in the last 12 months, with fewer than 6,000 units built.

“Our view on this is: Get some competition in the marketplace, expand commercial coverage, let us build the most affordable for sale homes in California, which are condos,” he said.

The American Property Casualty Insurance Assn., an industry trade group, called Lara’s plan “an important step toward restoring the FAIR Plan’s financial stability and ensuring consumers have access to the coverage they need.”

The deal reached by Lara with the FAIR Plan is a binding legal stipulation and it requires the insurer to develop a “Plan of Operation” within 30 days detailing how it will carry out the agreement. It has 120 days to submit a rate plan for offering the higher commercial coverage.

The FAIR Plan was sued last week by four California residents who claim its policies offer subpar coverage for fire and smoke damage. The proposed class-action lawsuit seeks to represent more than 300,000 of the plan’s residential policyholders. The plan also is facing a lawsuit from more than 1,000 homeowners in Los Angeles who say the plan wrongly denied their claims.

More to Read

California home insurance program accused of selling policies with subpar fire coverage

Allstate seeking 34% rate increase for California homeowners insurance

July 11, 2024

State Farm seeks major rate hikes for California homeowners and renters

June 28, 2024

Inside the business of entertainment

The Wide Shot brings you news, analysis and insights on everything from streaming wars to production — and what it all means for the future.

You may occasionally receive promotional content from the Los Angeles Times.

Laurence Darmiento covers finance, insurance, aerospace and dealmakers in Southern California for the Los Angeles Times. He joined the paper in 2015 as an assistant business editor and has overseen finance, real estate and Washington business coverage. Previously he had been the managing editor of the Los Angeles Business Journal and was a reporter for the Los Angeles Daily News and other outlets. A New York native, he is an alumnus of Cornell University.

More From the Los Angeles Times

Man killed attempting illegal BASE jump from Grand Canyon

David Lynch has emphysema that limits his directing: He must ‘do it remotely,’ if at all

Entertainment & Arts

Pax Jolie-Pitt released from ICU after suffering ‘complex trauma’ from e-bike accident

Vehicle crashes into Irvine home, where dead body is found. Police shoot suspected driver

Advertisement

Supported by

Intel Will Cut Over 15,000 Jobs Amid Struggles to Turn Itself Around

The Silicon Valley chip maker also reported a net loss and declining revenue in the latest quarter.

• Share full article

By Don Clark

Reporting from San Francisco

Intel, the Silicon Valley chip maker, said on Thursday that it would slash more than 15,000 jobs to aid a turnaround plan, as the company tries to recover after a series of stumbles.

The job cuts amount to 15 percent of Intel’s work force . The company also announced other restructuring moves and a reduction in capital spending, which are expected to cut costs by $10 billion in 2025. To conserve cash, Intel said, it will suspend its quarterly dividend in the fourth quarter.

“This is painful news for me to share,” Patrick Gelsinger , Intel’s chief executive, said in a letter to employees. “I know it will be even more difficult for you to read. This is an incredibly hard day for Intel as we are making some of the most consequential changes in our company’s history.”

The company’s stock fell more than 20 percent in after-hours trading.

Intel, which produces microprocessor chips that serve as electronic brains in most computers, has battled a slump amid stiff competition in chips used for artificial intelligence. Its last major restructuring was in 2016, when the company said it would cut up to 12,000 jobs, or 11 percent of its work force.

Mr. Gelsinger has worked to reinvigorate the company after being named its top leader in early 2021. Among other actions, he quickly moved to become a top industry lobbyist for federal subsidies to encourage more U.S. production of the foundational components.

He has also tried to fix Intel’s manufacturing issues. Unlike most of its peers, Intel makes chips as well as designs them. Others rely on outside production services called foundries, with most turning to Taiwan Semiconductor Manufacturing Company.

We are having trouble retrieving the article content.

Please enable JavaScript in your browser settings.

Thank you for your patience while we verify access. If you are in Reader mode please exit and  log into  your Times account, or  subscribe  for all of The Times.

Thank you for your patience while we verify access.

Already a subscriber?  Log in .

Want all of The Times?  Subscribe .

Content Search

Postcolonial futures for disaster risk reduction in south asia - southasiadisasters.net issue no. 211, june 2024, attachments.

INTRODUCTION

This issue of Southasiadisasters.net is titled ‘Postcolonial Futures for Disaster Risk Reduction in South Asia’ offers pathways towards rethinking disaster risk and enhancing people’s everyday lives and livelihoods, moving away and ahead from mostly Western concepts, frameworks, methodologies, and tools to more plural local pathways. Read 17 vibrant contributors-provoking perspectives to help you find your way to disaster risk reduction and preparedness for the future.

IN THIS ISSUE

• Introduction by Emmanuel Raju, JC Gaillard, and Mihir R. Bhatt
• Rains, Power and Waves of Recoveries by Emmanuel Raju, Director, Copenhagen Centre for Disaster Research, University of Copenhagen, Denmark
• Disaster Risk Reduction as an Illusion by JC Gaillard, Waipapa Taumata Rau, Aotearoa University of the Philippines Resilience Institute
• Price of Patti’s Land by Suchismita Goswami, University of Copenhagen, Denmark
• What Postcolonial ‘Disaster Risk Reduction’ may look like in South Asia? by Mahbuba Nasreen and Raisa Imran Chowdhury, GRRIPP-South Asia
• Knowing the Landscape and Taming the Landscape: Local and Mainstream DRR Perspectives in Nepal by Nyima Dorjee Bhotiya, Dipak Basnet, Tek Bahadur Dong, Anuradha Puri, and The Sajag-Nepal Project Team, Nepal
• Postcolonial Disaster Risk Reduction in Nepal: Insights from the Disaster Preparedness Network (DPNet) Experience by Surya Bahadur Thapa, Chairperson, Disaster Preparedness Network (DPNet), Nepal
• Disasters and the “Other” Gender: The Case of the Hijras in Odisha, India by Aditi Sharan, Waipapa Taumata Rau, Aotearoa / The University of Auckland, New Zealand
• Postcolonial DRR: COAR Experience in Afghanistan by Abdul Halim, Director General, Citizens Organization for Advocacy and Resilience (COAR), Kabul, Afghanistan
• Towards a Postcolonial Disaster Risk Reduction Approach in Sri Lanka: A Critique of DRR Policies and Practices by Nishara Fernando, University of Colombo, Sri Lanka
• Disaster Risk Reduction in Pakistan: Reimagining an Inclusive Response by Nirmal Riaz, Senior Research Associate, Karachi Urban Lab, IBA, Pakistan
• Decolonising Climate Coloniality by Farhana Sultana, Professor, Maxwell School of Citizenship and Public Affairs, Syracuse University, USA
• Colonial Logics, Postcolonial Futures, and Flooding Disasters in Pakistan by Ayesha Siddiqi, Assistant Professor, Human Geography, University of Cambridge, United Kingdom
• From Hazard to Haven: Empowering Child Co-researchers in Transforming a Hazardous Pond into a Vibrant Playground by Mayeda Rashid, PhD, Research Fellow, Monash University, Australia
• Implications of Disaster Risk Reduction from the Colonial Period by Eleonor Marcussen, Researcher in history, Linnaeus University Centre for Concurrences in Colonial and Postcolonial Studies, Linnaeus University, Sweden
• Self-Rule is the Key to Achieve Postcolonial DRR by Mihir R. Bhatt, All India Disaster Mitigation Institute, India
• સંસ્થાનવાદી આફતનિવારણ અને સ્વરાજ (DRR and Self-rule) by Mihir R. Bhatt, All India Disaster Mitigation Institute, India

Related Content

Heatwave deaths are avoidable - southasiadisasters.net issue no. 210, may 2024, unicef india, west bengal situation report no. 2 (cyclone remal): 30 may 2024, unicef india west bengal situation report no. 1 (cyclone remal) 27 may 2024, india annual country report 2023 - country strategic plan 2023 - 2027.

We've detected unusual activity from your computer network

To continue, please click the box below to let us know you're not a robot.

Why did this happen?

Please make sure your browser supports JavaScript and cookies and that you are not blocking them from loading. For more information you can review our Terms of Service and Cookie Policy .

For inquiries related to this message please contact our support team and provide the reference ID below.