9.4.4 How is the Risk Management Plan implemented?

A risk management plan should be manageable and not so large that its preparation becomes impossible. Operational plans for each risk on the list can be added at a later stage. At the end of this process you will have an outline of potential risks which is often called Risk Matrix. If you prepare it in the form of a table, this will allow you to bring all the information together in a few pages and will make it easier to follow.
The main techniques for dealing with risk are:

  • Risk transfer:
    A risk management technique which is applied when a business acquires a contractual assurance from another body to pay for any losses that it might suffer. It is used to decrease the risk in the relationships with suppliers, subcontractors and clients. Thus the business transfers to the contractor some risks during the transportation of row materials or final products, for example.
  • Avoidance:
    Helps you eliminate potential losses. This technique includes activities avoiding potential risk situations and does not address directly arisen risk. Of course, not every risk could be avoided, that is why it is used in combination with other techniques.
  • Loss control:
    This is a pro-active technique which helps to decrease the frequency with which the losses occur. It includes counteractions of the risk factors decreasing their impact on the company and is implemented before, during and after the loss origination.
  • Retention:
    The company covers losses from action using its own resources. Sometimes it happens naturally when a certain risk is not known or predicted. It happens as well when the company deliberately chooses to run a risk.
  • Risk insurance:
    A more expensive technique but works as a last option. It presupposes paying an insurance premium to avoid losses from the occurrence of certain insurance events like disasters, for instance.

Control and assessment of plan efficiency are of significant importance for dealing with future problems. It is important not to forget:

  • Everybody has to know their role, and responsibilities.
  • You cannot expect success, if the necessary funds are not available.
  • People taking part in risk management plan execution have to be trained.
  • The plan has to be flexible and continually updated.