The Cost of Risk Management

In our most recent newsletter, our focus was on the myth that risk must always be eliminated. A factor in managing risk is considering the cost to mitigate it.

One of two errors that often occur is on opposing sides:
#1. Ignoring the risk and taking no measures to address it
#2. Placing too much importance on a risk and utilizing extraordinary resources (often both Staff and financial) when the risk is not that great

As Business Leaders, the mitigation cost must be weighed against the impact of the risk. For example, if it will cost $100,000 to mitigate a risk that, if it occurred, would cost much less, then less stringent measures to mitigate that specific risk should be considered.

However, keep in mind that cost should not always be the only factor to consider when mitigating risk. Other exposures must be considered as well. Two of those will be discussed in our next two blogs.

Contact Charlene Aldridge at 972.447.9787 or to discuss how we can assist you in improving how you do what you do.

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