Council of Supply Chain Management Professionals (CSCMP) Practice Exam 2026 – The Complete All-in-One Guide to Exam Success!

Risk mitigation involves activities specifically aimed at reducing the potential impact of risks rather than eliminating them entirely. This approach recognizes that while some risks cannot be avoided or transferred, they can be managed in ways that lessen their adverse effects on an organization’s objectives.

For instance, implementing enhanced safety protocols can minimize the likelihood of accidents in a manufacturing environment, thereby mitigating the associated risks. Additionally, developing contingency plans ensures that if a risk does materialize, the organization's response can be swift and effective, further limiting damage.

In contrast, the other options depict different approaches to risk management. Strategies that aim to completely avoid any risk may not be feasible in many situations, as all businesses operate within some level of risk. Actions to transfer risks to third parties, such as through insurance, do not reduce the impact should the risk occur; they merely shift the burden elsewhere. Continuous monitoring of risks is essential for understanding the landscape and making informed decisions but does not inherently reduce risk impact. Thus, the focus of risk mitigation is on proactive measures that lower risk consequences, making this the most accurate identification of risk mitigation actions.