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

Risk mitigation refers to the process of identifying potential risks and taking proactive measures to reduce both the likelihood of those risks occurring and their potential impact. The primary goal of risk mitigation is not to eliminate risks completely, as this is often impractical or impossible, but rather to lessen their severity or frequency. For example, if a company identifies a risk of equipment failure, risk mitigation measures might include regular maintenance schedules, investing in higher-quality machinery, or training employees on how to respond effectively when issues arise.

This approach recognizes that while some risks are inherent in business operations, they can be managed strategically through planning and preparedness. Mitigation strategies can involve a range of actions, including risk avoidance, risk transfer (such as purchasing insurance), or risk acceptance, depending on the organization's risk tolerance and resources.

Options that suggest completely removing financial implications, ignoring risks, or assigning blame do not align with the fundamental principles of risk management, which emphasizes proactive engagement and responsibility in dealing with risks.