Risk Management Process

Risk Management Process

Risk Management Process Jonathan Poland

Risk management is the practice of identifying and mitigating potential risks that could result in financial losses or other negative consequences. It is a common business practice that is applied to a wide range of areas, including investments, programs, projects, operations, and commercial agreements. The goal of risk management is to minimize the likelihood and impact of potential risks and to ensure the smooth and successful operation of a business. Risk management strategies may include risk assessment, risk control, risk monitoring, and risk reporting. The following are common steps in a risk management process.

Identification

Giving all stakeholders an opportunity to identify risk. This can increase acceptance of a program or project as everyone is given a chance to document all the things that might go wrong. The diverse perspectives of stakeholders helps to develop a comprehensive list of risks. It is also possible to use databases of issues with that occurred with similar business processes, programs or projects in your industry. Knowledge sources such as lessons learned and the risk registers of historical projects can also be used.

Analysis

Developing context information for each risk such as moment of risk.

Probability & Impact

Assessing the probability and impact of each risk. These can be single estimates such as high, medium and low. Alternatively, they can be a probability distribution that model multiple costs and associated probabilities for each risk.

Risk Treatment

Planning a treatment for each risk such as acceptance, mitigation, transfer, sharing or avoidance. Risks that are both low impact and low probability typically aren’t treated.

Residual Risk

Assess residual risk including secondary risks that result from risk mitigation, transfer or sharing.

Risk Control

Implement identified controls for risk mitigation, sharing, avoidance and transfer.

Monitor & Review

Continuously identify new risks as things progress, monitor implementation of controls and communicate risk to stakeholders.

Learn More
Analysis Paralysis Jonathan Poland

Analysis Paralysis

Analysis paralysis, also known as “paralysis by analysis,” is a phenomenon that occurs when individuals or groups become so focused…

What are End Goals? Jonathan Poland

What are End Goals?

End-goals, also known as long-term goals or ultimate goals, are the desired outcomes or results that an organization or individual…

Employability Jonathan Poland

Employability

Employability refers to the value that an employee brings to an employer. It is the collection of attributes, skills, and…

What is Service Life Jonathan Poland

What is Service Life

The service life of a product refers to the length of time it can be used before it needs to…

Human Resources Jonathan Poland

Human Resources

Human resources is the department within a business that is responsible for managing and coordinating the people who work for…

Information Security Risk Jonathan Poland

Information Security Risk

Information security risk refers to the potential for unauthorized access, disruption, modification, or destruction of information. This can have serious…

Proof of Concept Jonathan Poland

Proof of Concept

A proof of concept (POC) is a demonstration that a certain idea or solution is feasible and likely to be…

Operating Model Jonathan Poland

Operating Model

An operating model is a framework that outlines how a business operates. It typically covers how a business produces and…

Marketing Channel Jonathan Poland

Marketing Channel

The total combined industries of consumer goods and services.

Content Database

Expectancy Theory Jonathan Poland

Expectancy Theory

Expectancy theory is a motivational concept that suggests people are motivated by their beliefs about the relationship between their efforts…

Brand Analysis Jonathan Poland

Brand Analysis

Brand analysis is the process of systematically and thoroughly examining a brand in order to develop strategies, plans, evaluations, metrics,…

Practical Thinking Jonathan Poland

Practical Thinking

Practical thinking is a type of thinking that focuses on finding timely and reasonable solutions to problems. This type of…

Inverted Yield Curve Jonathan Poland

Inverted Yield Curve

The inverted yield curve is a financial phenomenon that has garnered significant attention because of its historical association with upcoming…

Team Management Jonathan Poland

Team Management

Team management involves directing and controlling an organizational unit. Some common team management functions include setting goals and objectives, assigning…

Growth Strategy Jonathan Poland

Growth Strategy

A growth strategy is a plan to increase or improve some KPI, like revenue, profit, subscribers, etc.

Camping Strategy Jonathan Poland

Camping Strategy

Camping strategy is the practice of a using a geographical location as a competitive advantage. It has several common applications:…

Persistence Jonathan Poland

Persistence

Persistence is the ability to maintain motivation and effort over a prolonged period of time. It is a behavior or…

Promotion Strategies Jonathan Poland

Promotion Strategies

Promotion strategies are communication techniques that aim to sell a product, service or cause. They include advertising, publicity, selling and…