Everyday Risk Management

It may seem incredible, but every day people apply effective Risk Management principles to their daily activities.

From the moment we wake in the morning, we subliminally begin the process of hazard and risk identification, assessment and control, the aim of which is to reduce or eliminate risk from our lives.brush-teeth-small

For example: we wake in the morning and know that we either are hungry, or will be soon (hazard identification). The risk associated with this hunger hazard is that we may feel stroppy or have hunger pains (risk) and to control this risk we eat breakfast, and in doing so have implemented the first level of control in the “Hierarchy of Controls” (or order) and ELIMINATED our hunger.

Following breakfast we identify a potential hazard of furry teeth and bad breath. The risk here is we may lose our teeth and smell, so we implement controls of:

  • Brushing our teeth
  • Flossing
  • Mouthwash

Depending upon external factors (eg availability of time to brush – mouthwash only) and your individual Risk Appetite (what level of risk you are willing to proceed with ) you may decide to utilise one or all of the above controls in order to eliminate the hazards of furry teeth and bad breath.

And we continue our day, identifying hazards and risks and using controls (eg buying a train ticket, using a seatbelt, oven mittens, sunglasses etc) to reduce the likelihood and/or consequences of the identified risks.

My point here is that we all carry out effective Risk Management on a day to day basis; however, when it comes to corporate decision making, this Risk Management Framework is often neglected and decisions are made outside of an established framework and without appropriate analysis.

A Risk Management Plan is essential for organisations to ensure they are operate according to an approved and transparent Risk Management Process, ensuring hazards and risks are identified, controls implemented  and residual risk scores align with the organisations “acceptable risk parameters”.

More to come…