The Risk Management Process
What is Risk Management? The risk management process is a framework for actions that are needed to be taken. There ae 5 steps that can be taken for risk management. The process starts with the identification then it goes through the analysis and then evaluation. Then it goes through the treatment and finally the risk is
monitored. In the manual system, these process can go through a lot of documentation and sub processes but we will see this process in digital environment.
1: Identify the Risk First step is to identify the risks that are troubling the business in its operating environment. There are many different types of risks like legal risks, environmental risks, market risks, regulatory risks, and many more. It is very important to identify as many of these risks. If an organization has manual environment, these risks will be written manually
but if an organization has a risk management solution employed then all information will be directly inserted in to the system. The advantages of the management system will be that all the risks will be visible to all the stakeholders and management of the organization who has access to the system.
2: Analyze the risk Once the risk is identified it needs to be analyzed. It is also needed to understand the risk and different factors of it within the organization. To understand the intensity of the risk it is important to know the seriousness of risk that how many functions of the organization that risk effect. In a manual system the risk analysis is done manually while
in the implemented risk management system the risk is mapped in different documents, policies, procedures, and business processes. It means the system has already a mapping system that will evaluate risk and let you know about the fearing factors.
3: Evaluate or Rank the Risk Risks needs to be ranked because different risks has different solutions depending on the seriousness and severity of the risk. The risk that can cause some little inconvenience will be rated lowly while the risk that will affect the organization values or will be creating a big loss for
organization will be rated as high risk. Some risk can have little effect on the organization so they will not need the involvement of the upper management of the organization. Only the higher risks must be solved by the higher management while the low risks can be handled at the low level of the organization.
4: Treat the Risk Every risk need to be removed or eliminated. This can be done by connecting the experts from the related field whom the risk belongs to. In manual this can be done by calling the meeting of the stakeholders for discussion about it. The problem in it is the discussion is broken in different files, documents and sheets.
In a risk management solution, all the relevant stakeholders can be sent notifications from within the system. The discussion and its solutions can take place within the system and the stakeholders an upper management can take an eye on the discussion and the solutions within the system.
5: Monitor and Review the risk All risks can never be removed. Some risks always remain present like market and environmental risks. In manual systems, the monitoring happen through hardworking employees while under the management system the risks can be monitored by the framework of the organization.
If any factor of risk changes then it can be directly seen by all. The computers can also work in a better way than people to look at the risk then people.