Risk management aims to identify, assess, and prioritize risks for the purpose of minimizing, monitoring, and control of the probability and impact of such risks. There are different areas where the application of risk management is important and created as a base in creating the next strategic and work plans.
Risk management examples shown on the page vary from the risk of project management, event risk management, financial risk management, and disaster risk management among others. All of the risk management samples are available for download to aid you in your specific task of identifying potential risks in your work, event, or location.
The first and foremost smart goal for risk management is to identify the risks. Early identification gives ample time for correction or reducing the possibility of the risk to occur.
This risk may have a big impact on an individual or company in the implementation plan of any task or operation. Risks potentially come from either internal or external sources.
These are present in most working environments and thus need to be identified right away before any problem statement arises from them. This would include but not be limited to the following:
Mental Risks – Are vital sources of risk that should be considered in every company or organization. Ensuring the mental health of employees should take priority in every company plans. Sources for mental risk vary from stress and fatigue from the actual work to any depression or psychological disorder that an employee may be facing or would face.
Chemical and Biological Risks – Are risks involving the usage of hazardous chemicals at work like asbestos, aerosols, and cleaning fluids. Infectious diseases cause biological risks at the work place.
Market or Business Risks – Involve factors affecting overall performance management of financial markets, as can be seen on the Enterprise Risk Management for Financial Institutions example in the page. Another example which discusses the different factors involving business risks is seen in the Business Risk Management example and Corporate Risk Management example.
Environmental Risks – Closely related with chemical and biological risks, these are risks whether physical, chemical, or biological that induce a harmful response and effect land, air, water and natural resources as a result of an individual or organization’s activities. In effect, damages reflected back to the organization can be that of company image, penalties for violations, property and material liabilities, cleanup expenses, interruption of business, among others.
Inflation and Interest Rate Risks – Happens when prices of an investment change in relation to inflation. Any investor losing purchasing power is at risk especially during an inflation. The Market Risk Management example on this page discusses more pertaining risks that happen in any business market of choice.
Assess and Analyze Risks – Upon identification of risks, the severity of the impact it poses to your organization and the probability of occurrence is then determined. Having information on the probability of the extent of damage a risk has helps organizations in addressing the risk and in taking counter measures against it.
Evaluate and Rank the Risks – It is important to rank the risks according to their impact and the frequency that they occur in order for management to formulate strategic plans in parallel with the risks. Knowing which risk to prioritize in preventing from happening smooths out tasks that have to be carried out.
Treatments are made after the identification of such risks. They can be classified thus:
As with all daily plans for risk management, a project risk register exists to record details of all risks involved at the beginning and during the entirety of the project. This would be a basis in the future in identifying potential risks and the impact that risk would present to the organization or individual. The register would aid in the consistency of rating risks and in treating these risks. See Project Risk Management example for your reference.