Fundamentals of Risk Management

175

---

Risk response
176
TAbLE 
15.1
Description of the 4Ts of hazard response
1
Tolerate
Accept/retain
The exposure may be tolerable without any further 
action being taken. Even if it is not tolerable, the ability 
to do anything about some risks may be limited, or the 
cost of taking any action may be disproportionate to the 
potential benefit gained.
2
Treat
Control/reduce
By far the greater number of risks will be addressed
in this way. The purpose of treatment is that, whilst 
continuing within the organization with the activity 
giving rise to the risk, action (control) is taken to 
constrain the risk to an acceptable level.
3
Transfer
Insurance/contract
For some risks the best response may be to transfer 
them. This might be done by conventional insurance,
or it might be done by paying a third party to take the 
risk in another way. This option is particularly good for 
mitigating financial risks or risks to assets.
4
Terminate
Avoid/eliminate
Some risks will only be treatable, or containable to 
acceptable levels, by terminating the activity. It should 
be noted that the option of termination of activities may 
be severely limited in government when compared to 
the private sector.
More information and a brief description of each of the 4Ts is provided in 
Table 15.1. The 4Ts of hazard risk management can be summarized as:
●
●
tolerate;
●
●
treat;
●
●
transfer;
●
●
terminate.
Figure 15.1 suggests that there is a dominant response in relation to each of the
4Ts, according to the position of the risk on a risk matrix. For risks that are
low likelihood/low impact, the main response is tolerate. For risks that are high 
likelihood/low impact, the main response is treat. For risks that are low likelihood/
high impact, the main response is transfer, and for risks that are high likelihood/high 
impact, the main response is terminate.
In order to give some context to the range of risks that is being considered,
Table 15.2 provides examples of the range of potentially significant risks associated 
with the headings of the FIRM risk scorecard. Assessment of each of the risks will 

---