Question

pandemic, Markets are interconnected and can be fragile. The US stock market is down again today, based on Congress not passing the proposed stimulus. If it is passed, the Dow may go up again-world events can have dramatic impacts. For companies doing business in other countries, due diligence and research must be conducted in at risk countries which could include natural disasters or corrupt governments or clvil war. American companies do business in many conflict zones, including Iraq and they take a much greater risk than normal. A cost-benefit analysis is the key before entering into a risky market. Class, what are some mitigation techniques companies can employ?

Answer 1

As well we know ,there are risks inherent in almost every major business decision.Even if decision-makers opt out of an oppotunity because it seems too risky,that decision in itself can still be hazadous.Being too timid could lead to things like new markets not being pursued, new products not being developed or allowing competitors to gain the advantage.Therefore it's crucial to have a detailed ,data-backed strategy in place to measure and reduce risk.

Risk mitigation planning is the process of developing options and actions to enhance oppotunities and reduce threats to project objectives.Risk mitigation implementation is the process of executing risk mitigation actions.The risk mitigation step involves development of mitigation plans designed to manage,eliminate,or educe risk to an acceptable level.Once a plan is implemented,it is continually monitored to assess its efficacy with the intent of revising the course-of-action if needed.

RISK MITIGATION TECHNIQUES

Some strategies may be econimically unfeasible for successful risk management.Generally,risks are taken on when strategies can be designed that reduce the risk level to "as low as reasonably practicable.

The four types of risk mitigation techniques include

AVOID: Risk should be avoided that involve a high probability impact for both financial loss and damage.

TRANSFER: Risk that may have a low probability for taking place but would have a large financial impact should be mitigted by being shared or transferred.e.g by purchasing insurance,forming a partnership,or outsourcing.

ACCEPT: With some risks,the expenses involved in mitigating the risk is more than the cost of tolerating the risk.In this situation,the risks should be accepted and carefully monitored.

LIMIT: The most common mitigation strategy is risk limitation,ie businesses take some type of action to address aperceived risk and regulate their exposure.Risk limitation usually employs some risk acceptance and some risk avoidance.

These techniques are balanced with efforts to reduce or eliminate the associated hazard such as time,cost or complexity.