Risks are the challenges, issues, and problems that can have a positive or negative impact on the overall project. Effective risk management is essential to ensure the risks and not negatively impact business goals.
Following is the difference between risk mitigation and risk avoidance.
Risk mitigation is the process by which an organization introduces specific measurements to minimize the unstoppable risk associated with the operations. Risk management is the essential business practice of developing a plan and taking action to reduce threats to the organization.
In simple words, risk mitigation is the process of minimizing project risk using various types of techniques.
Risk can be minimized by using the following ways
- Risk identification
If any company takes on a project, then the entire risk management team is discussing the risk of the project or which risk will be faced in the project. The risk management team identifies the risk which is directly impacting the project it can be a natural risk, political risk, economic environmental risk, or social risk. Also, the company look the company’s strength and weakness and external opportunities and threats
- Risk evaluation
When the entire risk management team identifies the risk of the project then the next phase of the team is the evaluation of the risk which means the valuation of each risk, if any risk is occurred in the process, then how many risks are occurred by the business, they decide the risk capacity of the project.
- Risk Control
The management team can try to control the risk which is a high-level risk, if any risk is not handled by the management, then they diversify the particular risk from the project and start the progress of the project.
Risk avoidance is the complete removal of the hazards, exposures, and activities that can result in losses of the project asset. If any company well knows the risk is occurred then avoids the particular risk but how does it define which risk is avoided or which not avoid? The management team of the company was studied when a project is initiated and worked on the project risk and whatever risks faced in terms of starting to end of the project. If any other risks happen midway through the project, then the management team gets the study on the risk and if this risk is not handled by the management, then the team decides to avoid the particular risk.
for example – A shop keeper wants to open a new shop in the market then he searches for the best area for his shop and takes a risk for the shop is running well or not, but he accepts the risk and starts searching for the best area for the shop and he got the place for the shop but the feedback of the previous shopkeeper is very bad about the shop because in that place mostly time some bad people have stolen the stored equipment and this is a problem for the shopkeeper. If it’s going regularly then the shopkeeper goes in loss and he makes close the shop. Shopkeepers avoid that particular risk and find a new place and start another shop that will settle in the market.