Topic 7.7: Risk treatment
The ultimate objective of risk management is to identify treatments that reduce hazardous risks to acceptable levels.
Opportunities, on the other hand should be maximised – we want to increase the probability and impact of positive risks, so treatments should position us to take full advantage of them if/when the risks materialise.
Although our options are practically infinite, we theoretically have only three options.
Selecting the most appropriate risk response involves balancing the costs and efforts of implementation against the benefits derived, keeping in mind your legal, social and other obligations.
Sounds a bit like the business case, doesn’t it?
Indeed, the decision-making process is quite similar – define the problem, consider the costs and benefits of alternative responses, and make recommendations.
You can even use multi-criteria analysis!
And stakeholders… did we mention stakeholders?
Indeed, you should always consider the values and perceptions of stakeholders and the most appropriate ways to communicate with them.
After all, though equally effective, some risk treatments can be more acceptable to some stakeholders than others.
And when risk treatment options are likely to impact on operations or risk elsewhere in the organisation, those stakeholders should also be involved in the decision.