Risk is about what can go wrong during your journey to the world of success. Many things can go wrong because issues which are not properly thought out at the beginning of the journey. The list of things which can go wrong may include the following;
- The mission may not be well defined or the plan to implement the mission may be faulty.
- The people involved may not have understood both the mission and the plan.
- The resources to implement the plan may be inadequate.
- The market may not exist to achieve the mission.
- On the extreme case either wars or major floods or other acts of God may take place.
The things which can go wrong can be classified into two categories those which are controllable and those which are not. Our article will give highlights on risks and deal with the steps in risk management. Risk management must be part and parcel of the strategy for achieving the mission and cannot be done in isolation.
Risk taking can be dangerous
Taking risk can be very dangerous and can even involve loss of life if risk management plan is in not in place.
Balancing risk and rewards
Reward you get is related to the risk you take. The bigger rewards, the bigger the risks. You cannot therefore get reasonable reward on your investment unless you are prepared to take some risks. All successful people take calculated risks that they can manage. People are prepared to take some degree of risk provided the reward is big.
Steps in risk management
The steps for risk management include the following;
Identification of risks
You can only manage risks that you know very well. Embarking on a journey without knowing the risks involved can be suicidal .Your process therefore of identifying risks must be exhaustive to ensure all key risks are identified.
Risk assessment
For each risk identified you have to carefully examine its possibility of causing loss or harm with the aim of putting a mitigation or precautionary strategy in place. The strategy ensures the loss is minimal in case of risks taking place.
Plan for risk management
This is plan which ensures risks are promptly identified, their impact assessed and the necessary response to address the risks is taken. For effectiveness the plan should be regularly reviewed to avoid the plan becoming irrelevant.
Tracking process
You have to put in place a system which will provide results of what is going on in the organisation. For example knowing where the lions are in the national park is very important in avoiding confrontations with the lions. Knowing the location of the lions is also important because the tourists want to see them. A risk can have both negative and positive consequences at the same time.
Risk Control and communication
Risk control is the process of using the findings under risk assessment to put in place a mitigation strategy to reduce the risks.
Risk communication
Risk communication is the exchange of information on risk in order to help in responding to the occurrence of risk.
Author
John Muhaise Bikalemesa
Director: Big Drum Advisory Services Limited
john.muhaise@bigdrumassociates.com
