Risk Mitigation Associates.com

Sometimes it is not possible to mitigate a risk; i.e., it is not possible to incur a cost ahead of an uncertain event that will either reduce the likelihood of that event occurring or limit the loss should the event occur. Where mitigation is not possible, a contingency plan can be employed. A contingency plan is nothing more than a plan to solve a problem that may occur, but has not occurred yet. Indeed, the only difference between a contingency plan and a problem solution is the order of events: the plan precedes the occurrence of the problem, whereas the solution follows it. Note, too, that a contingency plan can form part of a risk mitigation plan in that it could provide for reducing the cost of the consequence of an uncertain future event by being prepared to handle that consequence. To the extent that future potential problems can be identified, plans for what to do to solve those problems should they arise can be formulated—these are the contingency plans. If there is a cost associated with these plans that must be incurred before the potential problem arises, the plans become risk mitigation.

What Is Contingency Planning?