Differentiate between Risk Mitigation and Risk Avoidance

Every company needs risk management system for the projects to be completed successfully. Projects inherently come up with certain types of risk that would impact positively or negatively the outcome of project. In order to get desired outcome, it is imperative to have risk management strategies for the project.

Risk Avoidance and Risk Mitigation are two of the risk management strategies implemented by the company to protect the project outcome, budget, time. Both are similar in few aspects and different in many aspects. But both strive to be effective for project risk management.

Risk Avoidance

Risk avoidance involves avoiding all the activities, tasks that are source of risk for the project. Risk avoidance is usually performed before commencement of any project. It may involve aspects like change in project plan, change in scope, and change in time line to eliminate the risk to the project. If there is a particular method, which will lead to desired result of project, by implementing it. But if this method poses any kind of risk to the project, then it should be avoided. The goal of this is to eliminate the probable occurrence of risk and its ability to affect the project outcome. The demerit of this technique is that, it can hinder the company from embracing the potentially advantageous and profitable opportunities. Sometimes it can slowdown the process, because employees are strictly asked to adhere to the rules to avoid the risk.

Risk Mitigation

Risk mitigation strives to lessen the effects and severity of risks on the project. We try to overcome the risk and complete the project. It is more efficient strategy than repairing the project after the problem has occurred. Mitigation follows from risk acceptance. We will not avoid the risk, rather accept the risk, and plan the methods and strategies to lessen the possible negative impact on the project.

Risk Mitigation steps

Following steps needs to be incorporated in risk mitigation strategy

• Identify the risk
• Assess the possible occurrence of risk and its impact on project
• Plan the risk management plan
• Execute the plan to mitigate the risk and its negative impact on project

Implementation of strategy

Company uses different methods to implement the strategies of risk mitigation and avoidance. For instance to implement risk avoidance, company may ignore client project, proposal, new investment capital in the company or project, because they may hamper the current operations of the company.

Whereas when implementing risk mitigation, they may want to take the advantage of risk and improve the outcome. They design all the mitigation strategies that will decrease the severity of potential risks for the project. They develop an understanding about the nature of risk, monitor the after effects of risk and if needed change the risk management policies. Use best practices to tackle the bigger risks before moving to the smaller risks.

All the risks cannot be avoided or eliminated completed in a project. For instance cyber security or data breach cannot be avoided or eliminates. Companies can reduce the risk by installing firewalls, Anti-virus, endpoint detection and response (EDR) solutions.

We cannot avoid third party risk, but by following proper due diligence, audits, and risk policy, emergency planning risk can be mitigated.