The Avoid option in risk, opportunity, or obligation management refers to eliminating the source of the risk, opportunity, or compliance obligation altogether. This design option is used when the potential negative consequences outweigh the benefits or when the organization determines that the situation cannot be effectively managed or controlled.
Key Characteristics of Avoidance:
Ceasing Activity:
Discontinuing operations, processes, or activities that introduce the risk or obligation.
Example: A company decides not to enter a market with excessively strict compliance regulations to avoid associated risks.
Terminating Sources:
Stopping engagement with entities or processes that create unacceptable risks or obligations.
Example: Ending a partnership with a vendor that does not comply with critical security standards.
Strategic Use:
Avoidance is often chosen when the risk is beyond the organization's risk tolerance or when mitigation is not cost-effective or feasible.
Why Option D is Correct:
The Avoid option involves ceasing activities or terminating sources to eliminate the risk, opportunity, or obligation, aligning precisely with the description in the question.
Why the Other Options Are Incorrect:
A. Share: Involves transferring a portion of the risk or obligation to another party (e.g., through contracts or insurance).
B. Accept: Involves acknowledging and tolerating the risk, opportunity, or obligation without additional action.
C. Control: Involves implementing measures to manage or mitigate the risk, opportunity, or obligation, not ceasing it entirely.
References and Resources:
ISO 31000:2018 – Risk Management Guidelines, which include avoidance as a risk treatment option.
COSO ERM Framework – Discusses avoidance as a method for managing unacceptable risks.
