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The Importance Of Risk Mitigation Strategy

Murphy’s law dictates that “Anything that can go wrong will go wrong”. To put it into our perspective, running a business has many moving parts that may lead to a catastrophic failure when one or more parts fail to function in an unexpected turn of events. More often than not, the majority of businesses lack the ability, resources, and initiative to accept, identify, and prepare for risks that are expected and unexpected. Having a risk reduction strategy in place to prepare for unforeseen circumstances increases the probability of continued operational reliability and resiliency. 

Partnering with outsourcing companies would mitigate the risk identified in areas such as strategic, financial, operational, compliance, and regulatory risks. Importantly, outsourcing companies are well-prepared to meet their clients’ demands in a changing business environment.  Dependent on their clients’ needs, they have structures and strategies which are flexible and adaptable in their implementation. 

Contingency Planning

Contingency planning is an important part of risk mitigation. Having a contingency plan provides options to help an organization respond to an incident, situation, or event that may or may not happen. 

  • Identify and accept the risk – the first step in making a contingency plan is identifying the potential risks that are bound to happen. The second step is accepting the fact that risk involves drastic changes in how your organization should react. It is important to remember that identifying risk revolves around historical or comparable data to have an overview of how it will affect the organization. Doing guesswork to determine how it would affect your organization is a recipe for failure. 
  • Identify strengths and weaknesses – Knowing your organization’s strengths will measure how you should react to specific circumstances. The strength of the company is an advantage that could be leveraged toward neutralizing a problem before it occurs. Whereas, every weakness of the organization must be identified and properly addressed before the risk of it occurring. Both strengths and weaknesses are a good measure of how an organization would meet any challenges in the future.
  • Planning for unforeseen risks – As previously discussed on the two points above, gathering data and identifying the organization’s strengths and weaknesses builds a clearer picture for organizations on how they will react to certain situations. However, the probability of an unforeseen risk happening is higher than you think. More often than not, unexpected events happen more regularly than expected. Planning for unpredictable events alleviates its potential to harm the organization. 

Outsourcing provides the benefit of meeting the demand in an event of a foreseen or unforeseen risk occurring. That being said, including an outsourcing service in your organization would mitigate risk and offers more reliable options to plan for any unpredictable events that could happen in the future.  

  1. Outsource for scalability of staffing – easily scale down or up depending on the needs of the current situation. 
  2. Outsource for cost-effectiveness – the affordability of services provides organizations to save up for a rainy day. 
  3. Outsource risk reduction expert – outsourcing companies offer licensed roles that could help organizations reduce risks such as Strategic Consultants, Compliance Officers, Risk Analysts, and Risk Reduction Managers. 

Implementation of the Contingency Plan 

Now that we’re done with the planning stage, the next phase is the implementation of a contingency plan. The important part of having an approved contingency is that it must be distributed to all departments. Being well-informed and prepared on the contingency plan would help all of the divisions of an organization react to any event or situation when the need arises. 

The implementation of a contingency plan depends on the size of the organization and its available resources. Larger organizations may find it difficult to implement contingency plans because of their size and complexity. However, a larger organization has more resources available to them rather than smaller organizations that have a limited amount of resources. 

Monitoring the Outcome 

A well-developed plan may not always deliver the desired results. Any organization must monitor the results of the contingency plan. If the organization is satisfied with the results, then the organization may have no need to tweak or change the ongoing plan. However, if the plan doesn’t deliver the desired results, the organization may need to change or improve its plans. In addition, having an outsourced strategic consultant’s role is to monitor and make recommendations to a client’s organization on how they should react and implement the plan.

Operational Resiliency

Once an organization had successfully implemented its contingency plan by resisting, absorbing, recovering, and adapting to an uneventful situation. Then it is safe to say that the organization had secured its continuity and longevity. Being operationally resilient to such situations would make an organization more competitive in the future. 

The Bottom Line 

In conclusion, a risk mitigation strategy is one of the most important parts of managing an organization. Having all kinds of the well-developed plans for any situation when the need arises by being proactive, intuitive, flexible, and adaptable would decrease the impact on the operations of the company. From the planning stage down to the monitoring phase of a contingency plan are the vital steps in ensuring the operational resiliency of an organization. With the help of outsourcing, risk management would be easier and your business could weather any storm.