Risk management analysis: The four main risks

Risk management analysis comprises of a series of measures that should be employed to prevent the occurrence or to allow an elimination of risks.

Risk management analysis is nothing more than a set of specific and defined processes to do everything so that the highlighted risks do not occur.

 

How does risk management analysis work

For efficient risk management analysis, you need to follow a particular process that includes:

  • Planning
  • Organizing
  • Directing and
  • Controlling

It refers to the organization’s resources, divided into human resources and material resources, which should serve the purpose of minimizing risks, or on the other hand, seek some way to harness them for the benefit of the company.

Identified risks have certain control processes that ensure that their occurrence is avoided or suppressed.

But mere identification is not enough for good risk management analysis. It pays to, at specified intervals, test the effectiveness of the measures mentioned by process analysts. After checking whether each of the risks will not occur, by using proper controls, you should record the results and determine the date of the next process verification and evaluation.

But if the opposite occurs, that is, if you realize that risk control measures are not effective, the whole process should be reviewed and new measures to control risk management should be set out, so they become effective again.

 

See also: How to perform SWOT analysis.

And: What is business SWOT analysis?

 

Important concepts about risk management analysis

If there is a possibility that the achievement of a goal is harmed, prevented from occurring or suffers negatively due to the occurrence of uncertain events, we call it the risk.

These so-called uncertain events can be caused by different factors. An efficient risk management analysis should be able to attend to every one of them to be able to identify them promptly in each of the listed cases:

Personnel risks

Caused by a lack of qualified staff and trained professionals to perform their functions. There is a possibility that errors are intentional, this is the result of the dubious conduct. The main risks from staff are:

  • Unintentional; resulting in omission or negligence
  • Qualifying; that is, the professional can not properly perform their duties due to a lack of capacity or ability
  • Fraud; when conduct unintentionally meets company standards and is characterized by material or values deviations, untruth disclosures, etc.

Process Risks

The occurrence of internal process deficiencies already used by the organization like inadequate performance indicators, inefficient controls, modeling failures and an inability to abide by the current laws.

Systems risks

Arising from inadequate, poorly structured or defective IT systems. Some examples:

  • Intermittent networks
  • Server crash
  • Physical damage to data storage components
  • System obsolescence
  • Improper maintenance
  • Power outage from internal causes
  • System  slowdown
  • Security holes

 

View more: IT Governance for controlling risks and information

 

External event risk

Caused by factors other than the internal environment of the company, for example:

  • Utility Interruption
  • Natural disasters
  • Theft
  • Vandalism

It is noteworthy that in the context of risk management analysis, this can be defined as the probability of an adverse organizational event and also, those risks that have already been planned and identified. It is the secret: if it has already been identified, we have all the conditions to manage the company’s resources to prevent it from occurring.

It’s the mission of process management.

Check out: The use of BPM with technology, people, and processes.

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