This post discusses 26 ways to identify risks in an organisation.

The first step in developing a risk management plan is identifying potential risks. Understanding the scope of possible risks will assist an organisation in developing realistic, cost-effective strategies for dealing with them. 

WHAT IS RISK IDENTIFICATION?

Risk identification is the first step of a risk management process. Risk identification is identifying and evaluating threats to an organisation, its operations, and its workforce. Organisations with robust risk management plans are more likely to minimise the impact of threats when and if they should occur. Creating a risk management plan involves formalising a risk management process and effectively utilising a firm’s resources. 

ASSESSMENT OF A BUSINESS

Before identifying risks, the organisation should assess its operations. Think about the business activities, including critical services, resources and staff, and things that could affect them, such as power failures, natural disasters, and illness. Assessing the business will help to understand crucial aspects of the company’s operations. When considering the types of risks exposure of an organisation, the management must think broadly rather than just looking at obvious concerns (e.g., fire, theft, and market competition). Understanding the scope of possible risks will help the company develop realistic, cost-effective strategies for dealing with them.

HOW TO IDENTIFY AN ORGANISATION RISK EXPOSURES

Understanding a business, operations, and work is necessary to identify risk exposures. After having a clear picture of the company, it would be easier to identify its risks. Review the business plan and think about what the business could not do without and what incidents could impact these areas. Ask vital questions, including:

1) When, where, why and how are risks likely to happen in the organisation?

2) Are the risks internal or external?

3) Who might be involved or affected if an incident happens?

26 WAYS TO IDENTIFY RISKS

Here are 26 techniques for identifying risks within an organisation: 

1. BREAK DOWN THE BIG PICTURE

Risk identification can be tiring at the beginning of a risk management process. These can be based on the business strategy and daily activities. Start the risk identification with a high-level analysis by focusing on things that could go wrong in the company or industry. 

2. ASK ‘WHAT IF?’ QUESTIONS

Thoroughly review the business plan and ask several ‘what if’ questions. 

3. INTERVIEWS

A firm’s risks can be identified by interviewing key stakeholders. The interview should be well planned, and specific questions should be highlighted before the interviews. 

4. ROOT CAUSE ANALYSIS

Risk analysis, also called root cause analysis, is the process of identifying and understanding the root cause of a problem. 

5. SWOT ANALYSIS

SWOT Analysis can be used to identify risks within an organisation. SWOT means strengths, weaknesses, opportunities, and threats. SWOT analyses an organisation’s strengths, weaknesses, opportunities, and threats.

6. RISK REGISTER

A risk register is an essential component of a risk management framework. The Project Management Body of Knowledge defines a risk register (or a risk log) as a document recording risk analysis and risk response planning results. 

7. PROBABILITY AND RISK IMPACT MATRIX

The probability and risk impact matrix enables organisations to prioritise risks to avoid time wastage and maximise available resources. The Probability and risk impact matrix chart is based on the principle that a risk has two primary dimensions: probability and impact. 

8. CONDUCT INTERNAL RESEARCH

If a company manages its claims and losses or has employees working closely with them, the organisation can perform internal research to identify risks. 

9. CONDUCT EXTERNAL RESEARCH

Every industry has its unique trends and everyday occurrences. Previous losses, risk management successes, news releases, and legal precedents can assist a company in identifying its potential risks. 

10. SEEK EMPLOYEE FEEDBACK REGULARLY

Everyone from the frontline staff to the CEO will have a different perspective of the organisation and its risks while performing their duties. 

11. ANALYSE CUSTOMERS’ COMPLAINTS

A customer’s complaint is an expression of concern or dissatisfaction. Customer complaints range from being unhappy with the product or service to being dissatisfied with a customer service provider. 

12. CONSIDER THE WORST-CASE SCENARIO

Thinking about the worst things that could happen to a business can help the firm deal with minor risks. The worst-case scenario could be the result of several risks happening at once. 

13. CHECKLISTS

A checklist is a tool that helps individuals and organisations to organise and prioritise tasks. Checklists are also known as task list applications. 

14. BRAINSTORMING

Brainstorming is a creative process that helps top management and other stakeholders identify risks and generate ideas. 

15. BRAINWRITING

Brainwriting enables everyone to share their ideas. Brainwriting is a valuable way of identifying organisational or project risks. 

16. ASSUMPTION ANALYSIS

Assumptions analysis helps identify risks and their sources of risks. The Project Management Body of Knowledge (PMBOK) describes an assumption as specific, accurate, and honest factors without proof or demonstration. 

17. PROCESS PLANNING OR FLOWCHART

Process mapping is the most common risk and bottom-up control identification approach. A firm can use a process flowchart to assess its work processes. 

18. INSPECTION

An inspection is a formal, structured examination of the physical working environment and its tasks. Inspection of premises and processes can assist in identifying potential risks associated with processes, operations, and premises. 

19. SCENARIO ANALYSIS

A scenario analysis describes possible future situations, including paths of development that may lead to those situations. It is about preparing for a variety of possible events and impacts. 

20. DELPHI TECHNIQUE

The Delphi Technique estimates the likelihood and outcome of future events based on the results of multiple rounds of questionnaires sent to a panel of experts. The Delphi method consists of several written questionnaires that allow experts to give their opinions. 

21. DOCUMENTATION REVIEW

Documentation reviews are structured reviews of a firm’s operations and projects to identify the organisation’s potential risks. For any inconsistencies, a document review involves reviewing vital documents, including process plans, project plans, operations manuals, resource schedules, and requirement documents. 

22. RISK MAPPING

A risk map, or a risk heat map, is a data visualisation tool for communicating specific risks an organisation faces. A risk map helps organisations to identify and prioritise the risks associated with their operations. 

23. ANALYSE PAST EVENTS

Think about past events and their impacts on the company’s operations and profitability. Safety management entails planning for the worst while expecting the best. 

24. THINKING PESSIMISTICALLY

Although pessimism is not often encouraged in the workplace, taking time to ponder pessimistically may help identify a firm’s potential risks. 

25. CONSULT AN EXPERT

The company will have relationships with multiple people that could help identify risks, such as insurance brokers, accountants, and financial advisors. 

26. USE MODELS AND SOFTWARE

Organisations can identify potential risks with operational risk identification tools, including models and software. Risk identification software assists businesses in planning and controlling their risk identification process by using computerised instruments to allow managers and project teams to communicate, share project data, highlight loopholes, and review identified risks. 

RISK IDENTIFICATION MISTAKES ORGANISATIONS SHOULD AVOID

Think about it. Ninety per cent of all risks can be eliminated or significantly reduced through essential risk management. A risk identification process should be adequate to ensure that an organisation identifies critical risk exposures.  

Here are seven risk identification mistakes that organisations should avoid:

1. Failure to recognise risks early when it is less expensive to address.

2. Not iteratively identifying risks.

3. Not identifying risks associated with critical stakeholders.

4. Not using the appropriate risk identification techniques.

5. Identify risks peculiar to processes, departments and branches.

6. Failure to make risks visible and easily accessible.

7. Not consistently capturing risks.