Risk and uncertainty are unavoidable circumstances in our life. Risk management is important in all levels of life, be it in personal or business decisions. In business, risk management is important to protect assets, finances, and operations of a firm. For any project you are carrying out, it is important to mitigate and manage risks. When teams have a well-constituted risk management process in place, they can identify and deal with risks from all quotas of their project.
Below is a step by step process that needs to be followed to identify, manage, and professionally mitigate risks.
Identify the risk
The first step to risk management is through identifying the risk. You can manage something which you have not identified in the first place. There are many ways to identify risk, and one of these ways is to collect data in a risk register. Get a team, colleagues, or stakeholders who brainstorm to gather important information to identify all major avenues for risk. Think of the many things that can go wrong and write them down.
Analyze the Risk
Once you have got all potential risks listed in your risk register, next is to ask yourself what you are doing with them. Determine how likely each of those risks is to happen and ensure you record the information in a register as well. When assessing risks, you will be able to proactively address many impacts including avoiding potential litigation, complying with regulations, addressing regulatory issues among others.
Prioritize the risk
Not all risks have the same impact. Evaluate the risks you have and determine the most urgent ones that need to be addressed first. Evaluate the resources you have and assemble anything possible to resolving the risk when it occurs. categorize risks as high, medium, and low depending on your specifics.
Assign an owner to the risk
After you have done all the hard work of identifying and evaluating risk, the next important step is to assign someone to oversee the risk. Who is that person responsible for that risk should it occur? It might be assigned to an individual or a team depending on its complexity. Ensure you assign the task to the right people, who have both competence and experience to mitigate it in the smoothest way possible.
Respond to the risk
This is the point where the rubber hits the road. After doing all the planning, the risk finally happens, and you have to respond to it. First, evaluate if the risk is positive or negative. Is it something that could be exploited for the betterment of your project?
For each risk, you identified, create a plan on how to mitigate it. Develop a strategy, be it preventive or contingent. Act on the risk according to how you prioritized it.
Once you have responded to the risk, that should not be the end. Continue monitoring the risk. Whoever has ownership of the risk will have the responsibility for tracking its progress towards ensuring a full resolution.