MARTA – Risk Management… beyond mitigation

Submitted by Antony Marcano

From his Blog Testingreflections.com

In a previous rant about the misuse of the term mitigate in the context of risk management I listed the following strategies (I call them MARTA) for managing a given risk:

  • Mitigate – Reduce the severity of its impact
  • Avoid – Don’t do the thing that makes the risk possible
  • Reduce – Make the risk less likely to happen
  • Transfer – Move the impact of the problem to another party (e.g. insure such as paid insurance or outsource with penalties for failure)
  • Accept – Do nothing or set aside budget to cope with the impact

I recently found myself having to explain this and used the analogy of crossing a busy road with fast-moving cars. What’s the risk? Well, you might get hit by a car.

This will probably be more useful if you take a moment to think of a busy road with fast moving traffic that you know of and then use each of the above strategies to identify different ways of managing the risk. What factors would be significant in deciding on which strategy (or combination of strategies) was the way to go?

Ok, now that you’ve had a chance to think about it, here is what I came up with:

  • Mitigate – Walk down the street until I can find a section of the road where there is a 20mph speed restriction. (This is mitigation because I’m not necessarily making it any less likely that I’m hit, but if I am hit the ‘impact’ is reduced – i.e. I’ll probably live – albeit with injury).
  • Avoid – I could simply not cross the street, by deciding that whatever is on the other side simply isn’t that important or I could use an underground subway (which of course has other risks associated with it depending on the area you’re in).
  • Reduce – Find a stretch of road where there are fewer cars – reducing the probability of being hit by a car.
  • Transfer – Get someone else to cross the street, maybe someone more skilled at crossing the road than me.
  • Accept – Now, if it was a busy street, I wouldn’t ‘accept’ the risk. But, if the road allowed for lots of visibility and there were very few cars and there were speed bumps slowing the traffic down to 10mph then I might just accept the risk.

The person I explained this to found this to be a useful exercise in understanding my views on risk management – beyond mitigation. Hope you find this way of explaining it useful too.

» Antony Marcano’s blog

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One Comment on “MARTA – Risk Management… beyond mitigation”

  1. riskviews Says:

    This post is right on target, and like all of the best writing on ERM, it totally transcends the specific sector for which it was written. (Follow the link back to Antony’s site to see which sector that is.)

    The only way that I would suggest that this could be improved would be to use the word OFFSET where it uses TRANSFER. http://wp.me/pevO4-4l

    To use Antony’s great story about crossing the street, he gets it right, most people would think that risk transfer would be getting someone else to cross the street for you.

    But most things that are called Risk Transfer, are really Risk Offset. Someone does not really cross the street for you, they offer to pay your dollar losses. That difference is pretty stark in this example,

    YOU still have the risk.


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