Simplicable Guide

8 Examples of Risk Reduction

John Spacey, November 27, 2015 updated on March 19, 2021

Risk reduction, or risk mitigation, is any strategy that reduces the impact or probability of a risk, potentially to zero. The following are a few examples:

1. Health And Safety

Requiring workers on a construction site to use safety equipment.

2. Exchange Rates

A European car manufacturer reduces exchange rate exposure to the Japanese Yen by paying Japanese part suppliers with yen from their sales in Japan.

3. Customer Service

A hotel reduces the risk of bad customer reviews by empowering all staff to handle customer complaints on the spot. For example, staff are able to upgrade a customer's room upon receiving a reasonable complaint.

4. Quality

A car manufacturer reduces the risk of expensive and damaging model recalls with more rigorous quality assurance processes.

5. Dispute Risk

A construction company reduces the risk of disputes by sending representatives to neighbors of a site to explain the schedule and what will be done to keep noise and impact to a minimum.

6. Weather Risk

A solar power company reduces weather risk by scheduling critical construction tasks during the months with the best weather in a particular region.

7. Financial Risk

An infrastructure company reduces interest rate risk and refinancing risk by selling long term bonds when rates are low.

8. Project Management

A project manager reduces project risk by breaking a project into small regular deliveries of weeks in duration.

Overview: Risk Reduction
Type	Risk
Also Known As	Risk Mitigation
Definition	An action that reduces the impact or probability of a risk.
Risk Treatments	Avoid Reduce Transfer Accept