What is Risk identification?
Risk identification is the process of spotting, recognizing or classifying potential risks which may affect an organisation. Risk identification can help a company to be prepared if these risks occur. This is one of the early stages of the risk management process.
What is Risk identification like?
Risk identification is like the theoretical part of a driving exam, where you have to spot people or things which may be hazardous to you. For example, if you notice children, you will be more aware that someone may dart out into the road. This is the same as a risk identification process. If a company is able to identify potential risks before they actually happen, then they can take steps to avoid them. Identification is the key to awareness and awareness is the key to avoiding the worst consequences if problems do occur. Spot the risks and they will be less likely to get in your way.
What is the purpose of Risk identification?
Risk identification is very important, because if you want to avoid or reduce a risk, you have to be able to identify that risk first. By identifying the source of a problem, or the series of events which may lead to a problem, an organisation can take steps to prevent these risks from impacting adversely on the organisation.
What are the different types of Risk?
Financial Risks – these are risks relating to the financing of the company; including marketing factors, cash-flow issues and credit risks. Operational Risks – risks which could affect the smooth-running of an organisation, such as weather problems, logistical problems or site-based issues. Health and Safety Risks – risks which could affect the health and safety of the staff or customers of an organisation.
What’s involved with Risk identification?
After the context of risk has been firmly established, identification of risk must begin.
There are a number of main ways to go about identifying risk, which include:
Source Analysis – Identify the common sources of potential risks, which may be internal or external.
Problem Analysis – Looking for risks around commonly known problems.
Scenario-based Analysis – Considering common scenarios and identifying associated risks.
Common-risk Analysis – Looking at risks which are commonly associated with your industry and applying these potential risks to your organisation.
Where does Risk identification fit into the risk management process?
Risk identification comes in the middle of the risk management process, after the context has been set, but before solutions are suggested and implemented. Once a risk has been identified, it can be evaluated to help to categorize how much of a threat it may be to the organization. Without the identification stage of the process, the rest of the process would not be able to occur.
How does Risk identification impact on managing organisational risk?
Risk identification is a very important part of managing organisational risk, because the risk must first be spotted and evaluated, so that appropriate strategies can be implemented to reduce or remove the risk. Risks may be identified at any part of the organisation.
What terms are used in Risk identification?
Risk – a problem which could occur.
Identification – recognize, clarify and classify a risk which may occur.
Consequences – what may happen if a risk is allowed to occur.
Source – The place where the risk may arise.
Scenario – A series of events which may cause a problem to occur.
Dependencies – Things which may or may not happen, given certain circumstances.
Challenges – Problems which could cause another risk to occur, or which could prevent a successful counter strategy from being implemented.
Where can I find more information about Risk identification?