What is risk reduction?

• A. Investment of funds to reduce the risk on a project.
• B. Shifting the risk from the project to another party.
• C. Avoiding risk entirely.
• D. Ignoring potential risk events.

Answer: (A)

Risk reduction is about taking actions to lower either the likelihood of a risk happening or the impact it would have if it occurs. This usually means investing resources to put controls in place, add redundancy, improve processes, or train the team so the project becomes less vulnerable. In project risk management, reducing risk is a proactive mitigation approach aimed at making the project safer or more reliable, not at avoiding risk altogether or shifting it elsewhere, and not at ignoring it. The option describing investing funds to lower risk on a project best captures this idea of proactive mitigation. The other options describe risk transfer, avoidance, or neglect, which are not risk reduction.