Risk management is an essential activity in any organisation. A risk manager is concerned with managing the risks (uncertain issues and incidents) that, were they to occur, would affect the product or services that an organisation set out to deliver.
The three main steps within the M_o_R (Management of Risk, the OGC risk management methodology) framework can be applied within any organisation for effective risk management.
The first step of risk management is identification. This covers naming and explaining any risk that might affect the achievements of your organisation so that you can understand these risks and manage these risks effectively.
The techniques you use for identifying risks will differ according to the size and structure of your business, the nature of the activity or project and the experience of the risk management team.
For example, risk management within a smaller organisation may involve brainstorming and discussing potential risks to the project based on the expertise of the team members involved. A larger company might draw on the experience of risk management experts who have the knowledge and experience to deal with risks across a range of scenarios.
Evaluation is a critical part of successful risk management. Without this critical analysis of potential risks identified in the first stage, risk managers may underestimate the potential impact of a particular task.
The two factors that must be considered in risk analysis are:
It’s important to rank risks according to their immediacy and impact to the organisation. This enables the risk manager to prioritise and plan how individual risks will be controlled.
The final stage of managing risks in your organisation is control. The risk manager of your organisation needs to identify the appropriate response to a risk and assign a risk owner, who ensures that the risk response is carried out, monitored and controlled.