What is risk management?

If you travel every day from your place of residence to the workplace, it is a good practice to you assess what could go wrong during the trip. A flat tyre, car runs out of fuel, and the engine may malfunction and suddenly stop working or the driver sleeps while driving! You examine all these as potential events which could happen. These events threaten your objective of reaching your workplace safely and in time. The process of analyzing what could go wrong is one of the critical steps in risk management. To do so effectively, you must first understand the context in which you operate.

This entails understanding the internal and external environment of the organisation and asking what are the vision, mission, goals and objectives? What are the opportunities and threats, strengths and weaknesses in which the organisation operate to achieve the objective?. It’s a mark of excellence.

Before you go to sleep, you ask what could go wrong. Thieves could break into your house. To mitigate such a risk, you make sure the doors and windows are firmly looked. You have contacts of the officers at the nearby police station in the event thieves break into your house.

To conduct effective risk management, we usually ask leaders to undertake the following simple exercise;

  1. Get a blank piece of paper
  2. Write the top two (2) objectives of the company
  3. On the other side of the paper, write what could go wrong to threaten the achievement of the stated two objectives

It is a very interesting brainstorming exercise in risk identification. Leaders come up with so many events that could threaten their objectives and going concerns. You realize that these things might not happen at the same time. Also, some events have higher chances of happening than the rest. We focus on the ones most likely to happen, have a big impact on our objectives, and adequately manage them to increase our odds of success.

Summary;

Risk is the effect of uncertainty on objectives. If you don’t have any objectives, you don’t have to worry about risks.

Start by understanding your context. And thereafter, brainstorm to identify what could go wrong.

Exercise:

  1. Get a blank piece of paper
  2. Write your top four objectives
  3. Write a list of what you think could go wrong and threaten your ability to achieve the stated objectives.

For more insights into risk management, look out for the upcoming book titled “Your Role in the Coronavirus Risk Management” by Mustapha B Mugisa. Visit www.mustphamugisa.com to place your order for the same or buy the book, How to Get on the Board and Add Value.

Copyright Mustapha B Mugisa, Mr. Strategy 2022. All rights reserved

Share this

Leave a Comment

DOWNLOADABLE RESOURCES

Categories

ABOUT AUTHOR

Scroll to Top