In every single human action there is some form of risk involved; personal, project or monetary, or some combination of these three. The task of the responsible individual is to identify the risk and act accordingly. We all do these ‘risky’ things, almost daily, aware that we are taking a risk. Instead of staying clear of the risk we become proficient at recognizing it and developing a plan for dealing with it should it appear. This is what’s meant by risk management, and it’s a fundamental skill that’s crucial in almost every endeavour.

The popular misconception that risk management is difficult or complicated stems from the bureaucratic methodology of some system-oriented organisations and managers. It is neither complicated or bureaucratic, and need not be. Risk management is basically a simple proposition with a complexity dictated by the nature of the situation to which it applies - usually a project, and the parties involved. In its basic form risk management involves: In its simplest form, risk management deals with:

1. Identifying risk - Looking for anything that threatens the successful completion of the project against the original requirement. Risks can be environmental, organisational, technical, legal, economic or commercial.

2. Counteracting risk - Taking action to remove or reduce the probability of a risk being realised. The response depends on the nature or seriousness of the risk.

3. Acting when the risk event occurs - Invoking whatever contingency measures were devised for the risk that has materialised.

And for this to happen requires:

4. Monitoring at all stages - This typically means documenting a risk assessment in a profile that identifies the risk, the probability of its occurrence, and the impact if it does materialise. Factors that score highest are those that require the greatest attention and monitoring. A good risk manager will devise contingency plans that reduce either the probability or the impact of these occurrences, and so remove them from the scene.

Working within a formal structured management system similar to that defined by ISO 9001 requires the application of risk assessment practices to satisfy the requirements of the Standard. Auditors who work within systems such as these might not initially notice any specific references to risk management in these domains even though the identification of potential failure (8.5.3) encompasses a broad topic that can only be called “risk management”.

Well managed risk taking is a necessary feature of any forward thinking enterprise, since risk is an element of any progression or improvement. It’s the personal acceptance of efficient risk management along with the unwavering impulse to push forward from a relaxed position which creates progress and advancement. Doing just what we’ve always done only because the risks seem to be insignificant or are easily identifiable is to be ‘risk averse’, and for forward thinking organisations of any kind, such behaviour can’t be tolerated. Nor is it acceptable to go after new ideas without detailed knowledge of their possible benefit, careful planning, a clear understanding of the potential threats to these gains being realised, and a plan for handling them should they appear. We should strive to manage in a way which isn’t predictable or reckless. Risk assessment is the all-important tool which supports this strategy. We ignore it at our peril…

Ed. Bones is a chartered quality professional and an IRCA registered Lead Auditor. He is also a senior partner with the Meon Consulting Group, supplying expert audit and consultant services for ISO9001 & ISO14001 management systems. The company web site provides detailed information for your perusal, and includes the special offer of FREE Advice. Want to learn more?

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