MITIGATING RISKS (INCLUDING RISK TRANSFER)
Controls are the most common method of mitigating risks. They are completely within the management’s sphere of influence and in a firm practising good risk management they will be increased or decreased to reflect the sensitivity of the firm to a particular risk. In practice this rarely happens, in part because of inertia. Firms should be alive to change and accept it as part of everyday life, all part of a culture of continuous improvement.
Another method of mitigation for the firm is to transfer the risk to another party entirely, for example through insurance. This enables a clear cost to be attached to the mitigation through the premium charged by the insurance company. It also explicitly limits ...
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