What is Risk Management?

Risk management is the process of:

• Identifying risks - each business will possess a number of risks, some of which will be unique to the business
  
• Analysing the risk - identify the causes and contributing factors to the risk
  
• Assessing the risk - what is the likelihood of the risk occurring and what will the consquences be if it happens
  
• Treating the risk - what controls, policies and procedures, and business processes can be put in place to mitigate the risk
  
• Monitoring the risk- establish a process for monitoring the risk
  

Before risks can be effectively assessed and managed the business owners (or in the case of a not-for-profit organisation the management committee) need to establish their risk appetite.  This is essentially their tolerance for risk consequences.  For example suffering a loss of $50,000 may for one business may constitute a moderate level of loss, for another it may be a financial disaster.  Risk appetites and risk management plans should be re-assessed annually.

One specialised area of risk management is Business Continuity Management which deals with how critical functions are maintained and restored in a timely manner when internal or external events cause significant disruption.

Contact us to learn how we can help you establish a risk management plan for your business.