Having identified and measured the risks, the next step is to determine the appropriate risk management response to a given risk. Too often, risk is thought of as an element that is to be eliminated or at least mitigated. However, given our definition of risk, and given the objective that the risk function can and should be a value-added function, the range of possible responses to risk is, and should be much broader. In particular, management plans for risk can range from: avoid, eliminate, mitigate, reduce, hedge, ignore, embellish, and embrace. Additionally, and very importantly, there are some risks that simply cannot be a-priori managed. For these risks, a risk management response is still required. In ...
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