In risk management, what is meant by 'risk mitigation'?

The concept of 'risk mitigation' refers to the proactive measures taken to reduce the potential impact or likelihood of risks that could negatively affect an organization. This could involve various strategies, such as implementing safety protocols, adopting new technologies, or enhancing training programs to address identified risks. Instead of eliminating risks altogether, which is often unfeasible, risk mitigation focuses on finding ways to manage and lessen the severity of the risks.

Selecting measures to minimize risks can include diversifying investments, developing contingency plans, or utilizing insurance. These strategies are essential in the risk management process because they help organizations maintain stability and reduce the potential for financial or operational losses.

Other options highlight misconceptions about risk management. The idea of enhancing risk factors for potential profits suggests a speculative approach, which is contrary to the purpose of risk management. Eliminating risks entirely is often impractical, as some level of risk is inherent in all business activities. Lastly, accepting risks as they come implies a passive approach, which does not involve the necessary planning or strategy that effective risk mitigation requires.