PROCESS MANAGEMENT GLOSSARY
What is Risk Management?
Risk management is the process of identifying, monitoring and managing potential risks.
The primary aim of risk management is to minimise or negate unfavourable outcomes for your organisation. There are three core phases of risk management:
Three Phases of Risk Management
1. Risk assessment and analysis
Phase one aims to find as many potential risks as possible. In order to this throughout your organisation effectively, you need experts in all fields of your organisation on board. Recognising a fault in a timely manner requires an intimate knowledge of that department.
However, when you have people in place ready to call out those issues it can save a lot of time, money and resources further down the line.
2. Risk evaluation
Phase two analyses the impact identified issues may have, in both the short and long term. It also encompasses evaluating the associated costs, benefits and other impacts you can expect when fixing these issues.
3. Risk treatment
Finally, the third phase, risk treatment is the process of dealing with the risks which have now been both identified and evaluated. It also covers implementing change to ensure that the same risks have a minimal chance of reoccurrence.
A common misconception is that once these phases have been completed, your work is complete. However, this is not the case. These phases are an ongoing challenge that needs to be addressed and should be thought more of as a cycle rather than a project.
The frequency and depth of the analysis will vary with each organisation. Typically, organisations which are in shifting markets or have an agile working environment should be most vigilant when tackling these issues.