At its simplest, risk mitigation lowers exposure to risk, or moderates the adverse effects. A slightly more complete risk mitigation definition is “developing preventative and reactive action plans for reducing the likelihood of risk, or damage from risk.” Within the procurement and supply chain environment, the risk mitigation process includes using appropriate measures to secure supply.
Risk mitigation can also be thought of as risk control. For example, regular maintenance of a machine can help you control the risk of breakdowns. This preventative effort to mitigate or control risk costs money or resources. However, the cost of reacting to risk can end up being much higher. In our riskmethods Risk Report 2021, we provide insights for procurement and supply chain professionals on how to prepare for future shifts in risk and thus mitigate the effects.