Risk management is the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events.
Project Risk Management
A risk is something that may happen and if it does, will have a positive or negative impact on the project. A few points here. "That may happen" implies a probability of less then 100%. If it has a probability of 100% - in other words it will happen - it is an issue. An issue is managed differently to a risk and we will handle issue management in a later white paper. A risk must also have a probability something above 0%. It must be a chance to happen or it is not a risk.
The Risk Management Process
Risk Management is defined in the standard (AS/NZS 4360:2004) as "the systematic application of management policies, procedures and practices to the tasks of establishing the context, identifying, analysing, assessing, treating, monitoring and communicating".
It is an iterative process that, with each cycle, can contribute progressively to organisational improvement by providing management with a greater insight into risks and their impact.
Risk management can be applied to all levels of an organisation, in both the strategic and operational contexts, to specific projects, decisions and recognised risk areas.
Risk is defined as "the chance of something happening that will have an impact on objectives". It is, therefore, important to understand what the objectives of the University, Faculty, work unit or your position, are, prior to attempting to analyse the risks.
A simple process
Risk analysis is best done in a group with each member of the group having a good understanding of the tasks and objectives of the area being analysed.
1. Identify the Risks: as a group, list the things that might inhibit your ability to meet your objectives. You can even look at the things that would actually enhance your ability to meet those objectives eg. a fund-raising commercial opportunity. These are the risks that you face eg. loss of a key team member; prolonged IT network outage; delayed provision of important information by another work unit/individual; failure to seize a commercial opportunity etc.
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