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Finance & Banking vocabulary · Risk Management

Mitigate

Meaning in finance & banking, with examples

/ˈmɪtɪɡeɪt/verbCommon term

In finance & banking, mitigate means: To make a risk, loss or problem less serious or less likely, without removing it completely.

In Turkish: azaltmak, hafifletmek, sınırlamak

How it is used

A key verb in risk reports, credit proposals and audit responses. Banks mitigate credit risk with collateral and guarantees, and market risk by hedging. The noun 'mitigation' and the phrase 'mitigating factors' are common in credit memos, where the writer explains why a weakness is acceptable.

Example sentences

  1. The mortgage on the factory mitigates our credit risk.

  2. What controls do we have to mitigate the risk of internal fraud?

Common collocations

  • mitigate risk
  • risk mitigation
  • mitigating factors
  • credit risk mitigation
  • hedgeTo reduce the risk of losing money from changes in prices, interest rates or exchange rates, usually by taking an opposite position with derivatives.
  • collateralAn asset, such as property, cash or securities, that a borrower pledges to a lender and that the lender can sell if the loan is not repaid.
  • risk assessmentThe process of identifying possible risks, estimating how likely they are and how much harm they could cause, and deciding how to manage them.
  • credit riskThe risk that a borrower or another party will not pay back money it owes on time or in full, causing a loss for the lender.
  • guarantorA person or company that promises to repay a loan if the borrower cannot. The lender can then ask the guarantor to pay.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Risk Management

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This page explains English vocabulary for learners. It is not financial advice.