In sports, everyone knows you can’t win ’em all. Same goes for business: you can’t prevent all risks. However, through careful planning, measuring, and analyzing, you can reduce the likelihood of risk events. This is both a preferred and vital method for managing risk, because it prevents many risks from ever materializing. Consequently, it reduces your exposure to other risks and tamps down virulent outbreaks of concentrated risks, contagion, and triggered risks, such as stakeholder and reputation troubles. You can increase the bang for your risk management buck by employing the same risk reduction methods to tackle groups of risk.

If reducing the likelihood of risk events was the easiest method to use, companies would deploy it all the time and never see a risk materialize.

Unfortunately, it is among the most difficult solutions to implement well. That’s because it’s often difficult to prioritize which risks to reduce, and it’s a potentially very expensive endeavor. In addition, a company is often incapable of preventing all risks, or even a reasonable portion of them. Furthermore, many organizations struggle with the value of prevention, as they either doubt the likelihood of risk arising or underestimate the future impact of that risk. Because the benefits are hard to fully appreciate, the cost justification can be a challenge.

There are numerous risk prevention and reduction methods. In this chapter, we focus the spotlight on the most common and successful approaches.