Risk minimization is the process of doing everything possible to reduce the probability and/or impact of a risk towards zero. This is reserved for risks that are viewed as unacceptable to a society, organization or individual. Risk minimization should not be confused with the regular business process of risk management that allows for risk acceptance and partial treatment of risk. The following are illustrative examples of risk minimization.
HealthIt is common for healthcare related practices to seek to minimize risk. For example, minimizing the risk of infection after an operation.
SafetySafety related practices such as aircraft maintenance.It is common for societies, organizations and individuals to minimize risks they fear. In some cases, this generates significant secondary risks. For example, a society that fears a falling economic growth rate may take extreme steps to support growth that cause an asset price bubble that eventually causes harm to the economy.
In theory, it makes sense to minimize extremely high impact risks.
Risk ToleranceIndividuals or organizations with low risk tolerance may seek to minimize many risks. This may neglect opportunity costs and cause secondary risks.
This is the complete list of articles we have written about risk management.
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