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5 steps to do risk management effectively

Risk management

Any project or activity that we are going to start has an inherent level of risk. Even the decisions we make in our day-to-day lives have a number of risks built into them. But you will only be prepared for adverse situations if you know how to do good risk management.

We can say that risk management is a fundamental step for projects and for companies. It is essential to be able to identify them in advance, giving the possibility to take advantage of opportunities and mitigate threats – after all, they can cause serious damage to the organization.

The risks can originate from the professionals’ mistakes, from marketing situations, from unforeseen circumstances, from actions of nature and other factors. Do you want to know more about it? We have listed five steps to manage risk effectively and deal with threats and opportunities in the business.

1) Risk assessment 

The first step towards effective risk management is to be able to identify them. Through good project planning it is possible to identify opportunities and threats within an enterprise or a stage.

It is interesting to remember that risks are not synonymous of problems. A risk can be positive or negative for an institution or a project. Risks that involve gains are considered opportunities and those that involve losses and possible problems are called threats.

In addition, it is worth noting that your company’s sectors must already have predefined risk models for each type of situation, making it easier to identify them. However, it is essential to pay attention to the context of the moment and its respective characteristics, which can interfere with risk management.

2) Quantitative and qualitative analysis

After identifying the risks, it is necessary to analyze them in a qualitative and quantitative way. In other words, to assess the impact that these risks will have on the progress of projects and the probability of their occurrence.

From then on, it is necessary to define what are the priorities and what actions must be taken to solve these issues.

It is very important to carry out periodic checks on the prioritization of risks, since there are numerous factors that can change them. Market situations, changes in exchange rates, variations in inflation and even decisions by the Federal Government can change the order of priority in your projects.

3) Response planning 

By identifying the risks and defining their order of priority, the next step is to be able to respond to them. If a threat is detected, it must be eradicated, but if an opportunity is found, it must be enhanced.

Thus, it is essential that you work with an action plan, aiming at the best possible solution to the anticipated risks. Thus, your company and its projects will not be taken by surprise, which generates several benefits, such as greater ease in the implementation and operation of the quality management system.

4) Monitoring and control

Organizations take risks all the time. But what is the use of implementing a series of risk management actions if you are unable to measure whether these are effective or not?

Continuous improvement must occur throughout the process, which makes monitoring and controlling risks an essential task. It is what allows the manager to act promptly if the impact or probability of the risk exceeds acceptable levels, identify new risks or implement new actions.

After the analysis, it may be possible to realize that the risk is not as great as previously thought or has been done enough so that it can allocate resources to other actions. The most important thing is to make adjustments to ensure that the risk is in line with the tolerance level desired by the organization.

5) Technology as an ally in risk management

Technology can be a great ally in your organization’s risk management process, allowing you to have greater control within your projects.

There are softwares on the market capable of optimizing all steps, ranging from the model of risk analysis that will be carried out, evaluation of criteria to prioritize decision-making to control measures to reduce the identified risk. Many of them are already in line with the ISO 9001: 2015 Standard, such as the Genebra RISK Module.

Conclusion

The entire organization has goals to be achieved. A well-implemented risk management allows organizations to reduce undesirable effects and promote continuous improvement to enhance good actions.

Although the ISO 31000: 2018 standard is a reference when it comes to risk management, ISO 9001: 2015 also addresses the issue of Quality Management. Requirement 6.1 of the standard- Actions to address risks and opportunities indicates that:

6.1.1 When planning the quality management system, the organization should consider the issues referred to in 4.1 and the requirements referred to in 4.2, and determine the risks and opportunities that need to be addressed to:

 

  1. a) ensure that the quality management system can achieve its intended results;
  2. b) increase desirable effects;
  3. c) prevent, or reduce, undesirable effects;
  4. d) achieve improvement. (…)

Thus, investing in technology is essential to optimize processes and organize information, promoting the practicality and evolution of processes within the organization. If you need to implement risk management and want to automate this process, talk to our experts.

 

Business photo created by snowing – www.freepik.com

Thatiana Sestrem

Journalist

July 01, 2020

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