In 2017, a survey was conducted in Italy, which included 164 small companies, about whether or not they performed risk assessment and if so, on which areas. It showed that 86% of companies conducted a regular risk assessment. The most common tests were on cyber attacks and general fraud, and managing risk profiles regularly to ensure maximum project and data safety.
Most companies conduct a risk assessment to recognize potential future obstacles in their daily functions or ongoing projects. Anything that might go wrong and lead to a loss in time, efforts, or resources is classified as a risk.
What Is Risk Assessment?
Risk assessment is about evaluating what could go wrong in the future. Risk auditors usually look at the current economic, political, geographical, and management situations to predict outcomes in the future and how it could affect the project.
A detailed report is then made for analysis by the project management and other relevant staff to make appropriate adjustments and manage a risk profile.
The risk assessment process includes:
- Identification of risk factors
- Risk assortment
- Identification of risk controls
- Identification of risk impact
- Risk report
Why is Risk Management Important?
The term ‘risk’ doesn’t just constitute a potential financial loss but also OSHA policy breaches, a loss of goodwill, or any other damage to a business. Risk auditors forecast future events, creating awareness for potential losses. Thus, risk profile management is important in helping the management make informed decisions on future events.
Some consequences of failing to manage risk include;
- Lack of transparency in high-risk situations
- Inability to cope with unexpected losses
- Immense losses
- Inability to grow
- Lawsuits, etc.
How to Manage my Risk Profile?
Once a risk has been identified, individuals or businesses can use pre- or custom-made models to mitigate the impact of risk. Monitoring a risk profile doesn’t just include analyzing risks when starting a new project or going a new direction, but warrants regular risk assessment.
The following are some essential factors that should be included in a risk profile.
- Risk triggers or indicators. These could be political stances of the local government, weather, or even the traffic conditions, based on the business structure.
- Risk intensity. This is a signal identifying whether mitigating said risk requires modest or drastic steps.
- Mitigation plan. When creating a risk mitigation plan, ensure all ends are kept in consideration and that there is room for error. It is common for several risk factors to come together and put a well-laid plan to waste if there is no wiggle-room in the mitigation strategy.
- Plan corroboration. Mitigating risk isn’t a one-man job. Risk analyzers need to keep the management and affected departments in the loop throughout the procedure.
- Reporting and tuning. Once the risk has been mitigated, it is vital to learn from it and make changes in the plan if necessary.
Risk assessment is one of the most important departments in a company, helping it forecast the future and make informed decisions on how to prepare for upcoming problems. Therefore, companies are always on the lookout for exception risk auditors.
Have you performed a risk assessment in your organization lately? Let APN Consulting can help you do a thorough evaluation and provide a comprehensive set of recommendations to mitigate potential risks to your business.