Risk Management Basics

Risk Management is essentially the process of identifying risks and trying to come up with
appropriate strategies so that your organization is best able to cope with the impact of
such potential risks.

All Risk Management programs should first, and foremost, be proactive so that risks can be
headed off before they occur. Risk is described as any potential for destruction,
disadvantage, injury or loss faced by the organization members, or the organization as a
whole. Risks may either pose immediate concern, or be those faced by the organization way
into the future.

Types of risks

1. Programmatic
2. Technical
3. Cost
4. Schedule
5. Supportability

Another way of defining risk is to divide it into Proposal Risks and Performance Risks.
Proposal Risks are those risks which are integral to the project undertaken, meaning the
risks come with the project (no matter what type of project it is.) Performance Risks, on
the other hand, are risks which are imbedded in the performance stance taken. When these
risks are properly identified, the business may be able to adopt an approach which poses
less risks, and can be more beneficial as well to the organization.

How does one best approach risk?

An organization ought to spend less time defining what constitutes a risk, and more time
trying to find ways to address that risk. An organization which fusses too long over
complex definitions probably will not be very prepared for the risk when it actually hits
them.

Steps in Risk Management

1. Determine areas of concern.
2. Determine risks and sources of risks.
3. Assess the potential for and effects of each risk.
4. Find options to address the risks.
5. Set priorities as how risk will be managed.
6. Creation of risk management programs.
7. Sanction implementation of such programs.
8. Monitor implementation of these programs and their impact.