CIMA P2 Syllabus D. Risk and Control - TARA - Notes
Risk Planning and Control strategies
TARA
There are four strategies for managing risk and these can be undertaken in sequence. It is sometimes called the TARA framework.
Transfer
This means passing the risk on to another party which, in practice means an insurer or a business partner such as a supplier or a customer
Avoid
This means asking whether or not the organisation needs to engage in the activity where the risk is.
If it is decided that the risk cannot be transferred nor avoided, it might be asked whether or not something can be done to reduce the risk.
Reduce
This means diversifying the risk or re-engineering a process to bring about the reduction.
It can also include Risk sharing.
This involves finding a party that is willing to enter into a partnership so that the risks of a venture might be spread
Retain
This means believing there to be no other feasible option. Such retention should be accepted when the risk and return characteristics are clearly known