Risk reduction means taking some action that will reduce, but not eliminate, the identified risk. It may involve additional actions, such as extra testing to reduce the risk of failure of the final product. Typically this results in a trade-off of additional cost against reduced risk.
Contingency planning does not reduce the chance of the identified risk occurring. Instead, it involves making additional plans, so that if the risk does occur you will be prepared and able to control the situation with the minimum cost and disruption.