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How can I respond to specific risks?

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Even if you have an urgent deadline, try and take time to analyze risks carefully. Before you choose a response, consider and discuss all potential responses to the risk. Talk with all involved parties so that you have a full idea of the risks and costs involved. Compare what your company and your peer companies have done in the past in response to similar risks and research the outcome of those responses.

One common response to a corporate risk is to avoid it by eliminating the cause of the risk. If the use of certain technology causes you to take a great risk in technical failure, for example, you could simply stop using the technology. Many times, risk avoidance is not a viable option for various reasons, but when it is, it could save you a great amount of stress.

Another option is to simply accept the risk. Many companies willingly accept risks that have a small likelihood of occurring and/or that would cause small losses. Kansas corporations, for example, will usually take the risk of a hurricane or earthquake causing them problems. The more probable the event, though, the bigger the risk you take in simply accepting it.

Many other times, companies choose to reduce the risk and attempt to mitigate their losses. In other words, you adapt corporate strategies to reduce the likelihood of the risk occurring while also reducing your potential losses if it does occur. For example, if a company is considering a project with limited chances of success, that business could perform extensive (though costly) research. This would increase the upfront costs, but it would reduce risk by determining the course of action most likely to maximize gain.

Finally, many companies respond to risk be transferring the risk, often to insurance companies. This is the risk response that spawns malpractice insurance for attorneys and doctors and liability clauses for contractors. It may cost you more up front, but you won't have the stress that comes from wondering about risk, "What if it happens?"

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