Risk is a part of everyday life, there is no avoiding it. Companies, investors, security personnel, and governments spend significant time assessing, prioritizing, and defending against perceived risks. Managing in the face of potential headwinds often consumes considerable time and money.
Risk management in business, investing, and security protection is far more complicated than simply purchasing an insurance policy and hoping for the best. It’s about understanding your inevitable threats and identifying the proper ways of dealing with them before, during, and after their occurrence.
What is Risk Mitigation?
Risk mitigation strategies have two objectives:
- Reduce the potential for a negative event to occur.
- Reduce the negative impact that an occurrence might inflict.
Effective risk reduction planning consists of measures to identify, prioritize, strategize, and implement.
Why Does Risk Mitigation Planning Matter?
The types of risk that pertain to an organization’s health or circumstances may appear in a variety of ways. Asking key individuals from different departments, for example, which risks are most meaningful to them will most likely yield differing responses. Threats seen by security personnel in a company will differ from those an accounting department manager may report. These risks may actually be equal in degree to the future of the enterprise.
The mission of top management and department heads is to evaluate the potential hazards and to develop strategies to avoid or minimize the impact of those risks.
Risk Response Measures
There are varying approaches to risk mitigation. Here are the most common methods used by top performing security teams around the world:
Assume and Accept
Key stakeholders may identify and acknowledge a particular set of risks and decide to allow the potential threat to follow through without devising specific strategies to manage the situation. Though no action is involved, this still represents a considered approach, much as “not hedging” an investment is a conscious strategy.
In the stage of assume and accept, the determining factors are acknowledged in terms of assessing security risk so the proper actions can be taken.
Watch and Monitor
After identifying the potential for risk, watching and monitoring the situation is an activity designed to carefully track any changes that may impact the possibility of risk. Monitoring a threat is much different than passively accepting its existence. You need to understand the surrounding landscape and avoid making assumptions.
Do your security measures need to be engaged or is the risk dissipating? A proactive security team that understands the ongoing activities and knows how to properly address them typically engages in watch and monitor risk mitigation techniques.
Avoiding risk is investing in systems and solutions that remove the potential for risk. One solution to this approach may be in removing certain barriers that hold potential risk, such as repositioning or relocating an asset to lower traffic areas so the risk no longer exists.
Risk limitation is a common strategy. The intent of this approach is to set limits to a company’s exposure to specific threats. This strategy is often employed when risks are known and unavoidable. In these cases, the strategies may avoid some risks and limit the damage that others may cause.
Risk buffering revolves around building individual systems that recognize when a risk or threat is approaching. Systems like Pathfinder Unattended Ground Sensors provide security personnel early warning of an imminent risk to trigger appropriate action, whether that be a physical response or slew to cue for further monitoring. While advance alerts to oncoming threats are necessary, two mistakes can stem from risk buffering, these are:
- Not responding even though the risk is imminent.
- Responding aggressively when the risks do not matter.
Creating a reliable control environment is essential to individual risk minimizing strategies. These controls include data-driven procedures related to physical security, personnel management, information systems, scheduling, and change management, all designed to reduce risk and increase safety.
Transference is a risk management strategy that involves outsourcing functions to a third party whose primary purpose is to handle that particular discipline. The idea is to remove the direct risk function and to focus on the core competencies of the company. Freeing up assets to focus on management of the core business can be a healthy approach.
Scenario: Best Practices
Utility companies have a historically high pressure to keep their assets safe from both physical and cyber threats. The NERC CIP security compliance standards that guide the industry are thorough, and for a good reason. Incidents like the Metcalf sniper attack, physical attacks on the North Dakota pipeline, and Russian hackers breaching multiple US nuclear facilities have prompted heavy handed responses.
Risk Mitigation Analysis is Critical
Identifying risks, assessing and prioritizing the potential harm to individuals and enterprises, developing appropriate solutions, and execution are the essential elements of a risk mitigation strategy. A high-level risk mitigation strategy is essential in any situation. Companies and key individuals must continually monitor the circumstances that may initiate threat and alter mitigation plans as needed.
Because many organizations are preoccupied with growth as their measure of success, they tend to ignore where their risks lie. Without a conscious risk mitigation process, these companies are vulnerable to competition, safety and security issues, and huge financial threats.