Risk Management

Mon, 05/10/2021 - 19:29 / 0 Comments

Risk management is a method for identifying, quantifying, and practicing risks in a way. Every organization has organizational goals, but also procedures and invisible risks. Risk management comprises identification, prioritization, and evaluation of risk to minimize the probability or impact of events and to maximize opportunities and results.

Risk management exists out of five basic steps.

Step 1: Scoping

Formulate the aim and scope of the risk analysis. Do you only want to map a department of the entire company? Do you focus more on risks than on financial risk? It is important to clarify in advance what the intention is.

Step 2: Make an inventory of the risks

Map out all risks using a brainstorm-like exercise. Also interviewing different disciplines of different can have possible information.

Try to classify the risks on the basis of level (strategic, tactical, and operational) and category (for example: financial, reputation, technical). Where possible, it is in the company's interest to make a link to the parts and departments.

Step 3: Analyze and assess the risks

After drawing up a complete overview, the risks will have to be taken for opportunities and consequences. Different models are available here. The result is a distinction in risks from small to large, whereby the focus can be on the most important risks that need the most attention.

Step 4: Test and take measures

The risks identified are already being mitigated by existing measures. If the main risk is still too high, take additional measures to bring it to a reasonable level. Testing the effects of the measures is also an important part. What will be the impact of the measures to be taken? the risks can be improved and mitigated with alternative measures.

Step 5: Monitor and adjust

After risk control measures have been taken, it is an ongoing task to continue to monitor the environment for effectiveness. Are the measures effective enough? Are there parts that change or have new risks arisen? Adjusting for these changes is an important part of risk management.