Transcript

The international risk management standard, ISO 31000, sets out the activities or risk management process to help you identify and manage uncertainties, risks and opportunities and become successful.

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The first activity that you must start with is to determine what are you trying to achieve, what does success look like for you and how you can measure that success.

Know what to do or the outcome that you are seeking to achieve.

Effective decision making must always be aligned with the achievement of your objectives or the outcome that you are seeking to achieve. These are things that matter most to you. By achieving your objectives, you become successful.

Risk management describes the activities undertaken to identify, assess and manage uncertainties, risks and opportunities that relate to your performance, the achievement of your objectives and ultimately to your success.

It is about identifying known uncertainties and managing their potential consequences that may hinder your performance or may impact the effective delivery of your products or services.

It is also about maximising your opportunities and improving yourself so that you can perform better, make better-informed decisions, and have a positive impact or influence on others.

Good risk management starts with performance and objective management. These can be entity-level, division, department, process, project, or even asset level objectives. Uncertainties, risks and opportunities must be understood in the context of objective.

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Your second activity is to identify the relevant uncertainties, risks or opportunities that may affect the achievement of your objectives, performance and success – both positively or negatively.

Your objectives are what must happen. Uncertainty is what might happen.

Risk arises from the effect of uncertainty on objectives. It is the consequences of uncertainties. Risk can only be meaningfully defined and managed in relation to objectives.

Inform key audiences or stakeholder of these uncertainties, risks and opportunities. Managing stakeholders is part of success management.

Note the difference between a risk and an issue. Risks are known uncertainties that may affect the achievement of your objectives.

On the other hand, issues are known events that are already or currently impacting the achievement of your objectives.

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Your third activity is to understand the event or situation better, analyse the likelihood and extend of your success within a given time period. Focus on those controllable events that have the greatest success or impact on your outcomes.

Analyse the causes and sources of uncertainties, risks and opportunities, their positive and negative consequences, and the likelihood that those consequences can occur. Determine the speed at which these uncertainties can impact you. Consider any existing controls and their effectiveness.

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Your fourth activity is to decide how you can enhance the likelihood and extend of your success or minimising the likelihood and extend of your failure or non-performance.

Evaluate the situation against established criteria. This can lead to a decision to:

1. do nothing further;
2. consider other treatment options;
3. undertake further analysis to better understand the uncertainty, risk and opportunity and their consequences;
4. maintain or enhance existing controls; or
5. reconsider your objectives and strategies.

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Your fifth activity is to develop and implement action plans for enhancing opportunities or mitigating uncertainties or risks.

Select the most appropriate cost-effective options and implement them using project management methodologies.

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Your sixth and last activity is to monitor your performance and achievement of objectives. Determine whether your operating environment has changed, whether existing uncertainties, risks and opportunities are still present, whether their likelihood is increasing or decreasing, and whether new uncertainties, risks and opportunities have emerged.

Information gathered can help you facilitate meaningful discussions with other people.

Take timely corrective actions to improve your performance especially when it is sub-optimal or when your objectives have not been achieved.

The key focus of risk management is on enabling your success by making quality informed decisions and taking the right risks when there are uncertainties to the achievement of your objectives.

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Thanks for watching.

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In this training, I am going to talk about how risk management can drive value creation.