Risk-based thinking is an important tenet of almost all ISO standards that businesses attempt to comply with. Risk-based thinking means your organization actively tries to identify, evaluate and address risks that could impact your product quality, the safety of your employees, environmental performance or your data security.
When you implement a risk reduction program, you have to rely on measurable indicators to track its progress. Absolute risk reduction and relative risk reduction are two terms you may come across in your efforts. While both assess how effective a control or intervention is, they do this from different perspectives.
Let’s explore what absolute risk reduction and relative risk reduction mean, how to calculate them, and which one you should trust in your organization’s risk management efforts.
What is Absolute Risk Reduction?
Absolute risk reduction (ARR) measures the actual decrease in risk after applying a preventive or corrective action. It tells you how much the probability of an unwanted event has dropped in absolute terms. In other words, ARR shows the real-world improvement in risk levels and how effective your risk management strategy is.
How to Calculate Absolute Risk Reduction?
The absolute risk reduction formula is:
ARR = Risk Before - Risk After
Where:
- Risk Before is the initial probability or frequency of an adverse event.
- Risk After is the remaining probability after implementing the control or mitigation measure.
For example, if your safety audit shows that the risk of workplace injuries was 10% before and after a new safety program, it is 6%. The ARR in this case would be 10%-6% = 4%. The 4% here is the actual improvement in safety performance at your organization.
Pros and Cons of Using Absolute Risk Reduction
If you choose to use ARR as a metric in your risk reduction program, here are the benefits and shortcomings you should be aware of:
Pros
1. Provides a Direct Measure: ARR gives you a direct measure of improvement as it quantifies the actual reduction in risk and gives you a realistic picture of how effective your control measures are.
2. Easy to Interpret: Since ARR is a simple difference between two measurable values, you can clearly see how much safer or how much more compliant a process has become.
Cons:
The major shortcoming of ARR is that it does not show how large the reduction is relative to the original risk. This means it does not allow for meaningful comparisons between risks of different magnitudes.
What is Relative Risk Reduction?
Relative risk reduction (RRR) expresses how much the risk has decreased in percentage terms compared to the original level of risk. It focuses on the proportion of risk reduction rather than the absolute difference.
For instance, if your initial risk of a compliance failure was 10% and it dropped to 5%, the relative risk reduction is 50%. This means the risk has been cut in half compared to the starting point.
How to Calculate Relative Risk Reduction?
The relative risk reduction formula is:
RRR = (Risk Before-Risk After) ÷ Risk Before × 100
For example, if your environmental incident rate decreased from 10% to 6%,
RRR = (10% – 6%) ÷ 10% × 100 = 40%.
This means the intervention reduced the environmental risk by 40% relative to the baseline.
Pros and Cons of Using Relative Risk Reduction
RRR is often used in compliance reports, safety programs, and performance benchmarking, where proportional change matters more than the raw difference. Here are the pros and cons of this metric:
Pros:
1. Highlights Proportional Improvement: RRR shows the scale of risk reduction relative to the starting level, which is useful for understanding how effective a program is compared to its initial condition.
2. Useful for Benchmarking: It allows comparison of different risk control programs, even when the absolute risks differ between departments or projects.
Cons:
The major drawback of using RRR in your risk management framework is that it can often exaggerate small effects. A small absolute reduction can appear large in relative terms, leading to overestimation of improvement. It also doesn’t directly show how many fewer incidents or failures occurred. This can make it less practical for on-the-ground performance tracking.
Absolute Risk Reduction vs Relative Risk: Which should you trust?
The choice between absolute risk reduction and relative risk reduction metrics should depend entirely on your purpose. Absolute risk reduction gives a realistic view of the actual improvement achieved and is better for operational and management decisions. Relative risk reduction, while useful for comparisons and reporting, can sometimes exaggerate small effects. The most reliable and effective approach is to interpret both of these together.
How to Make Your Risk Reduction More Effective?
Understanding absolute risk reduction and relative risk reduction is only the first step. To translate these into an actually valuable action and to make risk reduction effective, you need a structured compliance management system. This can help you embed risk-based thinking into everyday operations.
Modern quality and compliance platforms like Effivity allow you to map risks, monitor progress, and link improvements to measurable outcomes. Using dedicated risk and opportunity management modules, you can identify potential issues early, define mitigation plans, and track the reduction achieved through data-driven dashboards.
To make risk reduction truly effective, your system should also connect related functions:
- Non-conformance and corrective action management can help you ensure every identified issue leads to documented root-cause analysis and measurable improvement.
- Internal audit and management review modules verify that risk controls remain relevant and effective over time, providing feedback loops for improvement.
- Document control and process management maintain versioned records of policies, procedures, and evidence. These are crucial for demonstrating compliance and learning from past incidents.
- Monitoring and measurement modules quantify how risks evolve and help calculate both absolute and relative reductions using consistent data sources.
- Training and communication tools ensure employees are aware of updated risk controls, bridging the gap between planning and implementation.
Why Choose Effivity for Smarter Risk Reduction
Effivity’s risk and opportunity management softwarebrings all the capabilities we discussed above together within a single, integrated compliance management platform. Its modular design covers every area of ISO-based performance, from risk and opportunity management, non-conformance tracking, and internal audits, to document control, training, and management review.
With Effivity, you can automate documentation, maintain real-time visibility into compliance performance, and turn every risk assessment into an actionable improvement plan.
Visit the Effivity website today to explore the platform and schedule a consultation call with the team to understand how Effivity can help your organization make risk reduction more effective and sustainable.
