After risk analysis, the next step is to create a risk management plan. This plan contains the risks and details of how to deal with them. The methods to deal with different risks are based on the evaluation of the risks. This step is also called Risk Assessment. The assessment of risk is done using a numerical scale and measuring the impact of different risks. This results in a chart where each risk carries a numerical strength against the constant number. Based on the numerical strength of a risk, managers decide how to treat the risk.
A risk treatment plan explains the action plan for each identified risk. Note that it is not possible to identify all the risks associated with any project. Some risks are unexpected and need to be managed based on the immediate assessment of the risk. For identified risks, there are four methods of treatment:
•Avoidance – Avoid the risk partially or in whole
•Reduction – Employing methods to reduce the negative impacts of risks
•Sharing – Sharing/outsourcing the risk component to a third party, which is better equipped to handle such risks
•Retention – Acceptance of the risk, normally in cases where the gains from the risk component are far higher than the negative impacts of the risk
Scurich Insurance can help you with Risk Management.