Always manage the risks prior to fatalities

It is the currently anticipated operational risk factors and the related risk assessment that manipulate Companies' / Organisations' / Industry’s trends, with regards to business profit margins, business development and investments, as well as business transformation & change.

Every self-respected Corporation / Organisation should continuously implement an adequate Risk Assessment in order to assure its sustainability, longevity and improvement prospects.

Consequently, the Management should always be aware of the whole picture (Internal and External situational awareness), as well as any individual potential threat and its specific parameters.

The implementation of Risk Assessment

1. Risk Factors examination

The two prevailing models, that may be also used in a combination manner, for the identification and examination of Risk Factors are:

PESTLE approach model (Operational Environment)

• Political / Geopolitical (risk factors)

• Economic / Financial —//—

• Social —//—

• Technological —//—

• Legal —//—

• Environmental —//—

Internal - External risk factors approach model through the implementation of a SWOT analysis (*)

2. Analysis of Risk (**)

After the identification of potential hazards we analyse:

• The Likelihood (L) (possibility: rates from 1 to 5) of each hazard to happen

• The Impact (I) (severity: rates from1 to 5) of the hazard if it happens

and take into consideration the result of the multiplication (L * I), in order to extract the Current Risk Rate (CRR) (Variable from 1: "Very Low" to 25: "Very High" Risk Level)

3. Risk Mitigation / Control Measures Implementation (**)

We identify and implement all the appropriate measures in order to mitigate/control risks, in terms of mitigating Likelihood and/or Impact of each individual potential hazard.

The implementation of these measures identified should always imply that the Residual Risk Rate (RRR) is tolerable (low or very low), accepted and funded.

Additionally, we have to decide what will be the strategy for managing Risk (Avoid Risk, Transfer Risk or Control Risk (reduce Likelihood and/or Impact))

4. Feedback on the Process’ Adequacy

Risk Assessment is an alive, continuous and dynamic process. Therefore, the related feedback regarding its adequacy is essential. In that light, potential hazards’ status changes should always be taken into account and the needful updates/adjustments must be made.

Notes:

(*) It may be a part of a SWOT (Strengths Weaknesses Opportunities Threats) analysis that should be embodied to our examination in order to choose the best strategy for mitigating the risks or taking advantage current situation to our favour.

(**) The analysis of risk should be applied for every individual risk factor, examined separately from others. It is multiplication and not the sum of individual results

Ioannis Androulakis (Captain HN ret.)

For the detailed article please visit “http://ioannisandroulakis.blogspot.com/”