29/01/2021
RISK MANAGEMENT STRATEGIES AND PROCESSES
All risk management plans follow the same steps that combine to make up the overall risk management process:
1. Establish context.
Understand the circumstances in which the rest of the process will take place. The criteria that will be used to evaluate risk should also be established and the structure of the analysis should be defined.
2. Risk identification.
The company identifies and defines potential risks that may negatively influence a specific company process or project.
3. Risk analysis.
Once specific types of risk are identified, the company then determines the odds of them occurring, as well as their consequences. The goal of risk analysis is to further understand each specific instance of risk, and how it could influence the company's projects and objectives.
4. Risk assessment and evaluation.
The risk is then further evaluated after determining the risk's overall likelihood of occurrence combined with its overall consequence. The company can then make decisions on whether the risk is acceptable and whether the company is willing to take it on based on its risk appetite.
5. Risk mitigation.
During this step, companies assess their highest-ranked risks and develop a plan to alleviate them using specific risk controls. These plans include risk mitigation processes, risk prevention tactics and contingency plans in the event the risk comes to fruition.
6. Risk monitoring.
Part of the mitigation plan includes following up on both the risks and the overall plan to continuously monitor and track new and existing risks. The overall risk management process should also be reviewed and updated accordingly.
7. Communicate and consult.
Internal and external shareholders should be included in communication and consultation at each appropriate step of the risk management process and in regards to the process as a whole.
