A reactive response will always be less effective than a planned and proactive one. Risk management defined Risk can be seen as any hazard or source of danger with the potential to adversely impact on the operation and/or outcomes of a business which prevent it achieving its identified goals and objectives. Risk management is the term used to describe the activities and practices the business undertakes to address those hazards or sources of danger. These include the following activities: Identifying risk can include: – Undertaking workplace inspections and checks Analysing internal documentation to find examples of previous problems/issues Learning from the experiences of others Soliciting input from all stakeholders staff and customers – Evaluating and analysing risk against relevant criteria called assessment’ or – ‘risk ‘risk analysis’: see below Developing controls in a risk management plan to address identified risk via a risk management plan which may include reducing risk, sharing risk, avoiding risk, – eliminating risk, transferring risk or accepting it: see also of Controls’ below ‘Hierarchy Monitoring the implementation of the individually prepared risk management plan and – reporting on findings Monitoring the internal and external environments for new and changing risk on an ongoing basis throughout the life of the business to accommodate the dynamic nature – of the business world Reviewing the practices of risk management and its context to make sure risk – management practices reflect current and emerging need in to optimise business performance. Risk assessment Risk assessment/analysis occurs when risks have been identified. It is the process of examining identified risk so the business can understand and appreciate the totality of each risk (considering scope, nature, impact and other relevant factors) in order to use this information/knowledge as the basis for calculating the risk level each risk presents to the organisation. Using a risk assessment matrix It is useful to use a risk assessment matrix during the risk assessment/analysis process. A model risk assessment/calculation matrix is frequently used (several variations on a theme exist) to assist in these determinations in which the of Consequences’ are listed ‘Severity along one axis and of occurrence’ (probability) are listed along another for each ‘Likelihood identified risk. Each identified risk needs to be assessed using this matrix. A risk assessment matrix may look like this:
A reactive response will always be less effective than a planned and proactive one. Risk management defined Risk can be seen as any hazard or source of danger with the potential to adversely impact on the operation and/or outcomes of a business which prevent it achieving its identified goals and objectives. Risk management is the term used to describe the activities and practices the business undertakes to address those hazards or sources of danger. These include the following activities: Identifying risk – can include: Undertaking workplace inspections and checks Analysing internal documentation to find examples of previous problems/issues Learning from the experiences of others Soliciting input from all stakeholders – staff and customers Evaluating and analysing risk against relevant criteria – called ‘risk assessment’ or ‘risk analysis’: see below Developing controls in a risk management plan to address identified risk via a risk management plan – which may include reducing risk, sharing risk, avoiding risk, eliminating risk, transferring risk or accepting it: see also ‘Hierarchy of Controls’ below Monitoring the implementation of the individually prepared risk management plan – and reporting on findings Monitoring the internal and external environments for new and changing risk on an ongoing basis throughout the life of the business – to accommodate the dynamic nature of the business world Reviewing the practices of risk management and its context – to make sure risk management practices reflect current and emerging need in to optimise business performance. Risk assessment Risk assessment/analysis occurs when risks have been identified. It is the process of examining identified risk so the business can understand and appreciate the totality of each risk (considering scope, nature, impact and other relevant factors) in order to use this information/knowledge as the basis for calculating the risk level each risk presents to the organisation. Using a risk assessment matrix It is useful to use a risk assessment matrix during the risk assessment/analysis process. A model risk assessment/calculation matrix is frequently used (several variations on a theme exist) to assist in these determinations in which the ‘Severity of Consequences’ are listed along one axis and ‘Likelihood of occurrence’ (probability) are listed along another for each identified risk. Each identified risk needs to be assessed using this matrix. A risk assessment matrix may look like this:
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