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5 Minutes OnRisk Management

Five Minutes on RISK MANAGEMENTWhat is it and why is it relevant?

Image courtesy of waitporn / Freedigitalphotos.net STEP ONE: Identify what could go wrongSTEP TWO: Come up with corrective action before it happens

Risk Management is so prevalent within society that Food Safety Plans are now RMPs or risk management plans, we have a risk management standard, and there is even a Risk Management Society dedicated to promoting better risk management in New Zealand.But what is it and why is it relevant? Well risk management is essentially a way of identifying the things that could go wrong for your organisation and putting preventative action in place before they happen. Its relevant because organisations are run by humans, and humans make mistakes. Knowing how to deal with those mistakes before they occur and putting in controls to stop them from happening can save your organisation a lot of angst.

2What does it do?

Five Minutes on RISK MANAGEMENT

Image courtesy of jscreationzs / Freedigitalphotos.net It aims to prevent:FraudReputational RiskHarm to patronsHarm to the publicHarm to your employees

Risk management aims to prevent or at least to minimise the effects of things like:FraudReputational risksHarm to patrons or customersHarm to the publicHarm to your employees

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Begin by identifying risks

Five Minutes on RISK MANAGEMENTImage courtesy of KROMKRATHHOG / Freedigitalphotos.net List all the risksGroup similar risks togetherYou can use headings like:- financial- legal- communications- people- administration

Setting up a basic risk management plan is fairly easy. Begin by brainstorming all the possible things that could go wrong at your organisation no matter how crazy you think they might be.

Then group risks that are similar together can any be consolidated under larger headings? You want to try and group them with issues that require a similar response. Most organisations tend to come up with several sub-categories of risk under headings like Financial, Legal, Communications, and Administration.

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I know my risks now what?

Five Minutes on RISK MANAGEMENTRank the risks in order of seriousness- How likely are they?- How bad would it be if they did happen?2. Do you have anything in place to prevent the risk?- Note this down by each risk3. Now assess your risks again taking the preventative actions into account.- Are they still likely to occur?- How bad would it be now if they happened?4. This is your residual risk. Are you happy with this level? If not you will need to plan more corrective action.Image courtesy of Stuart Miles / Freedigitalphotos.net

Of course now you have an overwhelming list of potential risks so what do you do with them? Well first you need to rank them in order of their seriousness. The easiest way to do this is to grade them on both against how likely they are to happen, and how bad the repercussions would be for the organisation if it did. This is the total risk.Then look at the corrective or preventative action you have in place against each risk. What are you currently doing to stop that risk from occurring or to mitigate the damage it might do if it does?Once youve done that for each risk reassess their seriousness. Are they still as likely to occur? Will the damage be as bad if they do? This is your residual risk.You can then look at your residual risk and decide if you are happy with the level of risk. If you are then you dont need to do anything more at this stage. If youre not happy with the residual risk against any of your risk factors then you need to put additional actions in place.5Managing your risk

Five Minutes on RISK MANAGEMENT

Image courtesy of AdamR / Freedigitalphotos.net

Dont sit back and relax once youve done your risk profile. It should be a living document with regular reviews to ensure that all identified risks remain current and no new risks emerge unnoticed. Its also helpful to check that the corrective actions youve put in place are actually working.

6Help is available

Five Minutes on RISK MANAGEMENT

Image courtesy of Michal Marcol / Freedigitalphotos.net Joanna or Maree

04 801 5542027 284 3733

joanna@lianza.org.nz / maree@lianza.org.nz

Feel free to drop us a line if you have any questions about Risk Management. We are more than happy to share LIANZAs risk management plan with our members so you can see one in operation.

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