Risk management process
What is the Risk management process?
The risk management process is the name given to the steps which are taken to manage potential risks which may affect a company. There are different types of risk management process, but the most common processes involve seven steps, which come together to identify operational risks and take action against those risks.
What is the Risk management process like?
A risk management process is like a recipe from a recipe book. First you decide on what type of meal you want (context), then you collect the ingredients (risks). You do not usually eat the ingredients in their present state, but you may modify the ingredients by chopping, peeling, mixing, cooking etc (taking action) to make them more appealing. At the end of the cooking process, you will end up with something great! If you don’t follow the recipe, things might go wrong…
What is the purpose of developing a Risk management process?
Developing a comprehensive risk management process will help you to ensure that your risk is addressed in an appropriate manner. Developing a process will also help you to deal with risk in a consistent manner. Following the steps of the process may prevent you from missing risks or actions which you may not usually consider. Being prepared in this way can help if the risk does present itself.
What are the steps in a Risk management process?
Most risk management processes involve a number of steps. The most commonly used risk management processes have 7 steps. These seven steps usually include setting the context, identifying the risk, analysing the risk, evaluate the risk, treating the risk, and then monitoring and reviewing the whole process. It is possible that step seven may identify more risks.
What’s involved with implementing a Risk management process?
In order to implement a risk management process, an organisation must be willing to tackle risks before they become actually problems. They must be prepared to take steps to tackle theoretical problems.
Where does the Risk management process fit into the management of an organisation?
Management involves planning, organisation, directing and controlling. The risk management process actually fits into all of these levels, because it involves planning for the future, organising things to tackle potential occurrences, and then directing and controlling the risk management strategies which are chosen.
How does the Risk management process impact on managing organisational risk?
Having a functional risk management process is essential for any company which expects to face any form of financial, operational or safety risks as part of its general operation. Having a good risk management process, which can be followed from beginning to end, will make it much easier for companies to manage their organisational risks.
What terms are used in the Risk management process?
- Risk – A problem which may or may not occur.
- Context – the internal and external circumstances of the company
- Identify – To spot or recognize a potential risk.
- Evaluate – Judging and assessing a risk to see what consequences it could cause.
- Action Plan – This is the course of action which is decided upon and then implemented once the risks have been identified and evaluated. An action plan is a way of treating a risk, and can either reduce the risk, remove the risk or allow the risk to remain.
- Review – this is the monitoring process where all of the early stages of the risk management process can be checked and evaluated. This stage of the process can help an organisation to check whether their action plan is effective, and whether new risks have become obvious.
Where can I find more information about Risk management process?