Risk and uncertainty
All organisations face uncertainty on a daily basis. The outcomes of events can be either positive or negative, and are usually a mix of both, to varying degrees. There will be a range of implications for your organisation, whatever the outcome. So it's a good idea to plan for the risks of success as well as for possible problems.
What is risk?
Risk is often described as the danger of something going wrong, but this is only half the story. Most risk management experts now consider risks to be potentially good as well as potentially bad.
Focusing on uncertainty to manage risk
Managing all unknowns with one approach can enable organisations to be better prepared for what might happen. It is likely to be more effective than focusing only on the negative. A good risk management programme can help you to seize opportunities as well as prevent disasters or deal with a crisis.
For example, in setting up a new helpline, there will be uncertainty about the take up of the service. It might receive more calls than expected but as a result, user satisfaction may be poor, as callers face a long wait for an operative. Or perhaps the service has low take up, but this could provide capacity to hone helpline procedures and invest time in promotional work.
A step-by-step guide to managing risk
1. Explore areas of uncertainty for your organisation , looking at different elements of your work in turn, to identify possible risks. Consider the possible consequences of success as well as potential problems.
2. Assess how likely and serious the risks are. To identify the impact of a risk, try to consider all the possible consequences it would cause, both positive and negative. It might be useful to give each risk a score, say out of three, for likelihood and for impact, and to plot them on a 3x3 matrix.
3. Prioritise your risks. It's impossible to manage every risk your organisation will face, so use the analysis of likelihood and impact in step 2 to make your choice. It's better to manage properly the most serious risks than to manage a full list weakly.
4. Agree appropriate measures to avoid or manage the risks . This could involve one or more of these responses:
- preventing the risk
- minimising its impact
- transferring the risk to a third party
- planning contingencies in case the risk happen
- accepting the consequence
Whatever you decide, you should record your plans and make sure you have the resources to implement them.
5. Design a process for monitoring and reviewing your key risks and associated plans . Risks may come and go, or their likelihood or potential impact could change, so your risk management plan needs to stay relevant. It's a good idea to tie this monitoring and review process into your strategic thinking and operational planning.
6. Communicate your risk management plan. Make sure everyone in your team is aware of their responsibilities and is supported in implementing them. Consider others who could benefit from knowing how you deal with risks. For example, users may have more faith in your services if they are aware of your risk management policies and potential funders will also be looking for reassurance that their money is in good hands.
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