Whats are the 4 possible treatment once an assessment has identified the risk?

A risk treatment is mandatorily a part of an effective risk management plan. The plan here means how you respond to the reported potential risks. It details on strategies on how to deal with the various risks - low or high, acceptable or unacceptable. The plan also outlines the role and responsibilities of the team members.

Literally speaking, risk treatment also known as risk control, is that part of the risk management where decisions are made about how to deal with risks either in the external or internal environment. Various options like risk reduction, risk avoidance, risk acceptance and risk transfer.

Before you embark on risk treatment there is something called as risk response planning that needs to be taken care of. It is explained in detail below:

Risk Response Planning

Risk response planning no doubt is an integral aspect of risk treatment. The planning covers discusses and evaluates inputs like risk register, risk profiles and cause control matrix. Strategies are formulated and documented in this stage. The following four different strategies are discussed upon.

• Avoiding Risk - Risk avoidance requires identification of the risks first and foremost. This can be achieved through previous project experiences and histories. An analysis is then made upon those that have a tendency to arise upfront at project initiation. Then finally a course of action is arrived upon after assessing the relative impact of the risks.
• Transferring Risk - Risk transfer is one of the better means to dilute the impact of the risk. In project management as in finance a risk is often transferred to a third party. It only means the impact of risk is diluted to an extent that event or activity or project for that matter does not suffer a body blow. It also means that a special team outside of the project that bears the impact of the risk.
• Mitigating Risk - Risk mitigation is a control process that essentially stops a risk before it starts making an impact and bringing it to an acceptable level. Often a contingency plan is put in place to prevent the risk.
• Accepting Risk - Finally, there are certain risks that are unavoidable. This strategy is the best when the risk is low. But there has to be a due plan for the same such as determining when the project will be exposed to the risk and making small adjustments accordingly. A risk that is acceptable can be considered passive since no action at all is taken upon the same.

By the end of risk response planning various risks and the corresponding strategies are documented. A risk register is ready that contains all details vis-a-vis the time of occurrence, priority and the people involved in handling the risk. The risks have already classified as either internal or external. Relevant risks are assigned to relevant stakeholders accordingly.

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Risk – it’s an inherent part of doing business in any industry or niche. Risks exist in a myriad of forms, ranging from financial to cyber-attacks, and everything in between. However, not all businesses face the same risk, or even the same level of risk within a specific category. In addition to understanding the threats your organization faces, knowledge of how risk treatment options can help mitigate the effects of those threats is important.

What are the types of risk treatment options?

There are several different types of risk treatment options. Of course, it’s helpful to understand what a risk treatment actually is. Really, it’s nothing more than an action taken to help manage or mitigate a risk. A very general example would be installing fire alarms to mitigate the risk of fire within a building.

Of course, before you can take any sort of risk treatment action, you must understand what risk it is that you face. This requires the conduction of a risk analysis. Identifying risks can be done in any number of ways, from studying past projects or incidents to predict what might occur if your company were to take a specific action, to studying current documentation regarding other businesses and the risks they incurred through specific activities, actions or decisions. Once identified, you can then take steps to mitigate or prevent that risk.

You can break risk treatment options down in a number of types:

• Avoid: Risk avoidance is actually pretty self-explanatory. If a risk is deemed too high, then you simply avoid the activity that creates the risk. For instance, if flying in an airplane is too risky, you avoid taking the flight in the first place, and completely avoid the risk. Another example would be hiring an individual whose references would not recommend rehiring him — by not hiring him, you avoid the risk that he would not be an asset to your company.
• Transfer: In many instances, you can transfer the risk you take to another party. For instance, insurance companies exist for exactly this reason. You can also outsource the process in which the risk is present to another provider, thereby transferring the risk to the outsource provider.
• Reduce: Risk reduction is one of the most crucial steps for processes or activities that cannot be avoided, and where risk cannot be transferred to another party. An example of this would be training your staff on how to identify a phishing email, or on best practices involving login credentials and password hygiene.
• Accept: For some processes and activities, there is no option but to accept the risk. Of course, these instances should only involve low risk, or repercussions that are easily managed. Some risks might be completely acceptable and require you to take no action at all (a missed deadline on an open-ended project schedule, for instance).

Note these risk treatment options do not always reduce risk to nothing. In many cases, there is residual risk that must also be considered. In other instances, secondary risk can have an effect on your company, as well.

What are the steps in developing a risk treatment plan?

Developing a risk treatment plan is essential, but it requires you to follow a few very specific steps. However, before you can begin creating treatment plans, you will need to determine the level of treatment plan necessary at each risk level. For instance, what level of treatment would be necessary for a moderate risk? What about a minor risk? What about a high risk? What improvement opportunities are available?

• Treatment: The first step in developing a treatment plan is to specify the treatment option you will use, whether that is acceptance, transfer, sharing or something else.
• Document: Next, you’ll need to create a treatment plan document that outlines the approach you’ll follow.
• Accountability/Ownership: After creating the outline, you’ll need to determine who is accountable for ensuring the plan is implemented correctly and monitoring it moving forward.
• Timeline: Finally, you’ll need to set a resolution date — this is the final date by which the situation should be resolved.

Important tips for implementing & monitoring a risk treatment plan

A number of important tips can help ensure risk treatment plans are implemented correctly and monitored accurately. These include:

• Ensure the right structure is used to support the treatment plan. This may involve additional task delegation.
• Make sure that adequate resources are available for those involved in risk mitigation.
• Communication should be a significant concern, not only within the treatment plan, but also with key stakeholders.
• Accurate, timely risk analysis is the key to ensuring the right risk treatment plan can be developed.
• Ensure the owner of the treatment plan is able to specify how implementation will be monitored, including key indicators that note increasing or decreasing risk levels.
• Review treatment plan effectiveness and risk levels regularly through meetings. Include all stakeholders in these meetings.

Common tools used for risk treatment

A number of tools can be used with risk treatment plans, but perhaps the most useful is a risk register. This document details the event in question, the action taken, an outline of the plan that will be followed, the name of the owner and when the situation should be resolved.

Conclusion

Ultimately, risk is present in virtually every business activity, from hiring employees to storing data in the cloud. It is vital that risks be identified, analyzed and evaluated, and then treated with the applicable action. Failure to take any of these steps could put your organization in danger.

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