Risk management is an essential aspect of managing a business, and yet so many people do such a poor job of defining what “risk” is. In a post for PM South, Harry Hall explores ways to improve one’s ability to see results and ultimately add value to the company.
To Articulate Risk
People often struggle to accurately define what a “risk” is, which accounts for why risk management is so poorly managed. Imagine for a moment the risks associated with a fire. The risk would be the loss of the building, not the actual fire itself. Just keep in mind that the cause leads to the risk, which causes the impact.
If you are seeking to improve risk management results, there are four questions to ask yourself:
- Is the risk tied to some sort of corporate or team goal?
- Does the risk focus on undefined events?
- Is the risk clearly defined?
- Does the risk provoke a clear plan for response?
As an example, think about the problems associated with the aging workforce. Every time someone retires, the company is losing that knowledge. For this scenario, the risk statement may look something like this: “Because Baby Boomers are retiring, the FeelSecure Insurance Company may lose valuable knowledge resulting in adverse impacts to our future.”
Looking at this risk statement and the questions above, someone can arrive at the conclusion that this risk does not apply to a specific goal, but it does focus on the uncertain. It is not a clearly defined statement, and there is no distinguished plan of attack.
In other versions of this statement, the focus may be on knowledge gaps. There are some ways to address knowledge gap risks:
- Identify specific knowledge that will be needed in the future.
- Specifically identify those people who are nearing retirement.
- Identify what knowledge should and needs to be transferred to new people.
- Bridge the employee knowledge gaps.
- Hire former employees as consultants.
Risk management is essential, and the more it is practiced, the easier it becomes and the better the results. You can read the original post here: http://www.pmsouth.com/2015/11/29/how-to-improve-results-with-better-risk-statements/