Risk Management - Mitigate

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Once a choice has been made, you have several options.  You can spend resources attempting to 1) identifying and mining hidden opportunities inherent in this decision, 2) identifying and mitigating the inherent risks, and/or 3) find other decision opportunities.    It is not at all obvious how much resources (time, energy, and investment) should be allocated to each of the above.  Some amount of investigation is warranted as a follow up to any decision that you are about to spend resources in implementing as you want to gain as much upward gain as possible while avoiding the downside potential or risk.  Still, as you ponder risks and opportunities within a decision, there are other decisions out there to be found and seized.   The term opportunity cost is applied to the universe of choices that one could be spending their resources on but aren't. So, the amount of time (resources) spent on risk management must be tempered by the fact that you could just as well be doing something else with that time (resources).

There are two basic approaches to apply to both risks and opportunities.  One is an active approach wherein they are pursed vigorously.  The other approach is passive or wait and see.  With the latter approach, you only take action when it becomes necessary or obvious.   The is similar to fixing things when they break.   The former is one of prevention to forestall things from breaking in the first place.  

Once a risk is identified and it has been assessed as a large or medium risk, you must decide what to do about it.   There are usually precautions that can be taken in advance to either reduce the chance that an adverse outcome will occur or its consequence if it does.  Selecting what to do about a risk is a decision and the rules of decision makes apply.  Again, the goal is to find the string of mitigation actions that offer the higher reduction in risk for the cost to implement them.  Any active risk mitigation actions will have a cost associated with implementing them.  So, the return on investing in risk reduction should have the effect of moving the expected value of the outcome upward towards with an increased a higher return that is higher the cost to implement them.  Otherwise, you are paying more to gain less which is always an unwise choice. 

See the following example of a risk mitigation plan by clicking on the hyperlink: sample risk mitigation plan