What is Risk Management?
Risk Management identifies, analyses and responds to risk factors throughout the life of a project and in the best interests of its objectives. Proper risk management implies control of possible future events and is proactive rather than reactive and intertwines with change management.
Risk management assists organisations and individuals to decide:
how much risk we would accept to pursue our objectives
the necessary actions to deal with risk and uncertainty in order to pursue objectives.
It is important to recognise that risk management is not about eliminating risk but managing it.
The most important steps of risk management are:
1. IDENTIFY RISKS
Risk is an uncertain event or condition that, if it occurs, has a positive or a negative effect on the project objectives. Different organisations define risk slightly differently, but essentially, risk is the impact of uncertainty (‘manage’ the unknown) on corporate strategy, business plans and objectives. Risk is the possibility that something may happen and:
- Affect the achievement of objectives, or
- Cause uncertainty of outcome, or variability of an expected outcome
In order to identify a risk or uncertain event, we have to know the objectives or the expected/desired outcome first.