Week 5 Critical Thinking (PMJ410)

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Colorado State University, Global Campus *

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Accounting

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Apr 3, 2024

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Option #1: Five Strategies to Deal with Threats Alfred Lewis Pemberton III Colorado State University Global PJM410-1: Assessing and Managing Risk Dr. Durham February 18, 2024

Introduction In this week's critical thinking assignment I will discuss, analyze, and indicate the importance of each of the five strategies that can be considered for dealing with threats. For each strategy I will provide an example of what type of scenario(s) they could be useful in and briefly identify the impact of different strategies for threats versus opportunities in risk responses. Risk management includes multiple strategies to better handle or deal with a risk event. These strategies include, risk escalation, risk avoidance, risk transfer, risk mitigation, and risk acceptance. While the most effective risk response strategy depends on the specific risk involved, all of the strategies listed above can be used to deal with threats and opportunities in risk responses. The Assistant Secretary of Defense for Homeland Defense and Global Security defines risk response as, “activities (that) encompass actions taken to remediate or mitigate risk, or reconstitute capability in the event of loss or degradation.” (n.d.). Five Strategies in Risk Response “All types of organizations, from corporations to federal agencies, face a broad array of risks.” (Stine, K., Quinn, S., Witte, G., & Gardner, R. K., n.d). Risk response is a critical component of risk management, which is the process of identifying, assessing, and prioritizing risks, with the goal of developing and implementing strategies to mitigate, manage, and monitor those risks. This is important because it helps organizations proactively manage risks, rather than waiting until a risk becomes a problem to address it. Organizations can develop strategies to mitigate risks before they cause harm by identifying and assessing risks. When navigating the risk landscape, choosing the appropriate response depends on four things: the nature of individual risks, and organization's ability to exploit or absorb risk outcomes, associated threats and opportunities, and factors that influence risk outcomes. Such factors include impact, likelihood, speed of onset and duration (Wright, 2022). There are several types of risk response, including avoidance, mitigation, transference, escalation, and acceptance. Each type of risk response has its own advantages and disadvantages, and it is critically important for organizations to carefully consider their options before choosing a risk response strategy to ensure the risk is felt with properly and most effectively.

Risk Escalation Risk response escalation refers to the process of escalating or elevating a risk response to a higher level of authority or responsibility. It is a common practice in many organizations when a risk response plan is not effective or when the risk situation is beyond the scope of the initial risk response plan. The risk response escalation process typically involves four steps: Identify the need for escalation: This step involves recognizing that the initial risk response plan is not effective or that the risk situation has changed beyond what was originally anticipated. Determine the level of escalation: This step involves deciding on the appropriate level of escalation based on the severity of the risk and the impact it could have on the organization. Select the appropriate escalation path: This step involves choosing the most appropriate escalation path, which may involve contacting a higher level of management or engaging external experts or stakeholders. Implement the escalation plan: This step involves executing the escalation plan and communicating the changes to all relevant parties involved. As a result of following this process, organizations can ensure that risks are escalated to the appropriate level of authority and that the organization is taking appropriate action to mitigate risks in a timely and effective manner. Risk Avoidance Risk avoidance is a strategy used to mitigate the impact of potential risks on a project or organization. It involves taking steps to eliminate or reduce the likelihood of a particular risk occurring which involves eliminating or reducing exposure to a threat or opportunity to minimize risk. It is often a conservative approach that can be effective in certain situations, such as avoiding a known hazard or declining an attractive but risky investment opportunity. However, avoidance can also lead to missed opportunities and missed potential gains. This approach is typically used when the cost of preventing the risk is considered to be less than the potential consequences that could result from the risk. The risk response to avoid a threat involves identifying and evaluating potential risks, and then taking steps to eliminate or reduce their likelihood of occurrence. This could look like changes to processes, procedures, or policies, as well as investing in new technologies or training for current employees. The goal of

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