Risk assessment is about prioritizing which risks the organisation should act upon first. The purpose of identifying risks is to become more proactive to prevent events that could have a negative impact on the organisation, for example, financial losses or a lack of trust. In this blog post, we will go through how you can work with risk assessment and what is important to keep in mind.
When should a risk assessment be carried out?
A risk assessment should be carried out when there is a change, both within the organisation and events in our surrounding world. In an organisation, such a change can be, for example, new processes, activities, working hours or changed workload. In the world around us, changes can be, for example, a pandemic or war, which creates the need to analyze the impact it can have on the business.
The risk assessment must therefore be a continuous process where you go through changes that take place internally and externally, and how this can affect the organisation.
Who participates in the risk assessment?
Risk is everywhere in an organisation and therefore as an organisation you need to define how to capture these risks in the best way. A good way to determine who should participate in the risk assessment is to start from different levels in the organisation.
In order to succeed in the risk assessment, it is important to involve a broad and cross-functional group in order to have several perspectives of the businesses risks represented. A common mistake is to delegate the assignment to one person.
Our recommendation is to organise a risk workshop based on different areas of responsibility in relation to:
- overall risk - central management group/C group
- business specific risk - local leadership groups
- process-specific risk - process owner together with local representatives
How to make a risk assessment
1. Identify the risk
In this first step, the focus is on collecting as much information as possible about various risks in the business, for example work environment, information security and operational risks. As we previously mentioned about who should participate in the risk assessment, it is good to appoint working groups or divide based on subject-specific areas. To collect information about relevant risks, it can be beneficial if there is a digital tool in place that streamlines information gathering within the organisation and provides a clear overview.
2. Analyze and assess the risk
Once the relevant risks have been identified, it is time to assess and analyze which risks should be prioritized first. This is because an organisation does not have unlimited resources and therefore needs to prioritize risk work. In assessing the risks, one should think about how often these risks may occur and what the consequences may be. Sorting out the risks in this way can help in the prioritization work.
3. Address the risk through direct action or control activities
When we know how to prioritize the risks, we can implement mitigating measures. Actions can be implemented as direct actions or control activities. A direct action is used when something needs to be fixed immediately. It is a more costly way of managing risks because you constantly have to put out fires. Instead, it is more beneficial to implement control activities that are a more proactive way of working with risks. Control activities are steps built into the work routine to control, that is, manage and reduce, a risk through the routine work.
4. Monitor and follow up the risk
A central step to be able to work with risks in your organisation is to cleary document your work. This is because the information needs to be shared and communicated through out the whole organisation and at a lager stage reviewed. In the monitoring, you look at how it looks today, whether the risks have changed and whether the organisation has sufficient measures in place to manage the risks.
In summary, in a risk assessment one must find out what can happen, how likely it is to happen and what the consequences will be if it were to happen. With this background, those responsible can then make decisions about which measures and routines should be in place to prevent the risks.
Do you want to know more about how a risk management tool can help you monitor and implement processes in one place and provide a clear overview? Read more about Stratsys' tools for Risk & Control.