What does "risk mitigation" involve?

Risk mitigation involves implementing strategies and actions specifically designed to reduce either the likelihood of risks occurring or their potential impact should they materialize. This is a critical component of operational risk management, as it focuses on safeguarding an organization from potential threats that could disrupt operations, affect revenue, or lead to reputational damage.

Successful risk mitigation can include a wide range of actions, such as developing contingency plans, improving internal controls, enhancing training programs for employees, and utilizing risk transfer mechanisms like insurance. By focusing on both the probability of risk events and their potential consequences, organizations can create a more resilient framework that minimizes adverse effects on their operations.

While other choices might suggest certain aspects of risk management, they do not accurately reflect the essence of risk mitigation. For instance, the idea of increasing risks contradicts the fundamental goal of risk management, which is to protect the organization. Similarly, merely focusing on profitability does not take into account the necessity of evaluating risks, and reporting risks solely to upper management without taking any action does not align with a proactive risk management strategy.