Practice of Risk Management
Risk management is the recognition of potential risks and the implementation of an organized approach in dealing with these risks. It is applicable to all stages of life, from personal to corporate and can be used in the home, workplace and other environments. Risk management involves the identification, assessment and control of risks, followed by taking action to prevent and mitigate those risks. The most effective risk management process requires a comprehensive understanding of risk, including identification and assessment of the potential risks, followed by effective mitigation strategies.
The identification of potential risks is the first step of risk management. A risk assessment is a structured process that determines the likelihood of a certain event occurring and the impact it may have on the organization. This process includes identifying potential hazards, assessing the extent of their probability and the impact they may have on the organization. This step also includes assessing the severity of the potential risks and identifying the risk categories. Organizations need to undertake an in-depth investigation to understand the risks and develop an exhaustive list of potential risks that may be encountered.
Once the risks have been identified, an assessment of the probability and the extent of the impact of each risk needs to be performed. This evaluation should be done with due diligence, ascertaining the degree of risk associated with each risk. Based on this evaluation, the organization should then identify the appropriate measures that need to be taken to mitigate or prevent the risk. Risk mitigation strategies might include changing procedures or processes, introducing control measures, implementing safety measures and procedures, or avoiding certain activities altogether.
The next step in risk management is the implementation of the risk mitigation strategies. This includes the establishment of controls and procedures to minimize the probability and consequences of the identified risk. It also includes the development of strategies to ensure that the mitigation strategies are implemented properly.
Once the mitigation strategies have been put into place, monitoring of the risks is necessary to gauge their effectiveness and to ensure that the risks are being managed properly. Monitoring also helps to identify any changes in the risk levels and any new risks that have been introduced. If new risks are identified, their risks must be assessed, mitigated and monitored as well.
The last step in risk management is to provide feedback to organizational stakeholders of the outcome of the risk management process. This should include the implementation and success of the risk mitigation strategies, any additional risks identified and any changes in the risk levels. This provides stakeholders with an understanding of the risk management process and the level of risk protection the organization is able to provide.
Risk management is an essential process for any organization and must be implemented in the workplace to ensure its safety and efficiency. It requires the identification, assessment and control of risks, followed by effective mitigation strategies and monitoring. By providing stakeholders with an understanding of the risk management process and the level of risk protection the organization is able to provide, organizations can ensure the safety and efficiency of their operations and minimize the potential losses that come with risks.
