Periodic reviews of the risk assessment and risk response strategy are recommended. This is because risk is dynamic and risk management is a continuous process. We must always be on the lookout for new dangers, changes to existing hazards, and perhaps the extinction of existing threats.
The risk response strategy in this iterative process must take into account the findings of the evaluation, which are based on the earlier identification. And proportionately respond in response.
Why does the risk response strategy need to be updated?
Let’s take a look at an example: A company recognises the possibility that a fire, flood, or other natural disaster might cause the loss of its on-site stored information.
A medium likelihood and a very high negative effect are the outcomes of the risk assessment. As a result, the company determines that it can limit and share it as part of its risk response plan.
As a result of the efforts taken, the company digitises all of its data and employs cloud-based management software that provides multiple daily backups. Additionally, the data are still preserved on paper in safe locations away from the organization’s headquarters, just in case.
As a result, it is concluded in the risk assessment conducted a year later that this risk no longer exists.
However, other factors must now be considered, such as the loss of data in the cloud or the provider’s difficulties in upholding its duty to get daily copies of the files.
Since the company has chosen to maintain copies in another place and will always have the original paper files, this new risk has a low likelihood of occurring and would have little impact.
As we can see, dangers are dynamic; they change, arise, vanish, and either increase or reduce both their effect and likelihood of occurring. Because of this, the process of putting a risk response strategy into action is done on a yearly or semi-annual basis.
Four Guidelines for a Risk Response Plan
A risk response plan’s strategies mostly relate to the organization’s risk appetite. This implies that some companies want to “digest” some things and not others, much as some people seek the security of a secure job for life while others go on an adventure.
They may therefore be ready to “live in danger” or, alternatively, to work in a safe haven depending on their personality, the economic sector in which they operate, or simply their company philosophy.
In any event, it is vital to constantly take into account the following 4 professional techniques when creating a response strategy for risk management:
Method 1. Reduce or forgo risk
In this instance, measures are taken to eliminate the risk together with the circumstances or reasons that may produce it. This is a possibility in situations when there is a high likelihood of occurrence and a significant likelihood of harm.
Method 2. Lessen or lessen
The risk cannot always be completely eliminated. Or perhaps the expense of entirely removing it would outweigh the harm that would result from its existence. In certain circumstances, we move forward with taking steps to decrease or mitigate.
Theft in supermarkets is a latent occurrence with a high risk merchant account, when all incidents are combined together, a huge economic effect. But getting rid of it is quite challenging. It is a common danger that is managed by reducing its impact through the use of security guards, cameras, etc.
Method 3. Share or transfer
This implies that we transfer the issue to another party. In our first scenario of a compromised file, the business does not have the required equipment and safeguards in place to protect its recorded data. As a result, he chooses to “transfer” the issue to suppliers.
However, there are other ways to transfer or share risk. The most frequent option is to get an insurance plan that protects the company against liability.
Method 4. Accept the danger.
Finally, we must take the danger if we have no other option. It has to do with not acting. We merely understand that we cannot escape it and that we must learn to live with it. When there is a very low chance that a risk will materialise, organisations choose to accept it. An illustration of this is the potential for an earthquake to destroy the company’s infrastructure.
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