Certified Supply Chain Professional (CSCP) Practice Exam

In what scenario is the risk response termed 'mitigate' typically applied?

1. When the risk can be entirely avoided

2. When shifting risks is not feasible

3. When accepting the risks is not an option

4. When all risks are already documented

The correct answer is: When shifting risks is not feasible

The term 'mitigate' is commonly applied when shifting risks is not feasible. This response strategy involves taking proactive steps to reduce the impact or likelihood of a risk, rather than avoiding it or transferring it to another party. In scenarios where moving the risk elsewhere is not an option, organizations must implement measures to lessen the negative effects or to manage the risk effectively. This could involve improving processes, enhancing controls, or developing contingency plans to reduce potential disruptions. Mitigation strategies allow organizations to remain prepared and resilient in the face of uncertainties that can't be shifted but must be managed responsibly. In the context provided by the other choices, avoiding a risk is a different strategy where an organization decides to eliminate any activities associated with that risk. Accepting a risk suggests that the organization acknowledges it but chooses not to take immediate action; however, this could lead to vulnerabilities if risks escalate. Documenting risks is a good practice for awareness and management, but it does not directly relate to the need for mitigation if the risks cannot be transferred. Therefore, the application of the mitigation strategy is particularly relevant when risks cannot be effectively shifted to another party.