Risk Management Overview

Risk Management

• Risk Management is a process designed to identify, assess, and control threats to an organization's assets, income, and overall well-being, with the intent to minimize negative consequences.

• Hazards are potential sources of harm, defined as substances, events, or circumstances that could cause damage to health, life, property, interests, or value.

• A hazard is a potential cause of harm, while a risk is the chance of harm occurring from that hazard, according to workSMARK.

• The UNWTO defines risk as a situation exposing a person or thing to danger, harm, or loss.

Benefits of Risk Management

• Facilitates the identification of threats and opportunities for an organization.
• Enhances and informs the planning process.
• Reduces the likelihood of costly unexpected events.
• Contributes to improved resource allocation.
• Improves efficiency and performance.
• Improves accountability.
• Encourages continuous improvement.

Risk Management Framework

• A good framework aims to answer seven key questions:
  • What are we trying to achieve?
  • What events or circumstances could affect the achievement of our objectives?
  • What are the consequences if those events occur?
  • How likely are these events?
  • What can we do to manage the potential outcomes?
  • How will we maximize opportunities?
  • Can the organization recover if a risk eventuates?

Risk Assessment Process

• This process involves the following steps:
  • Identification: Brainstorming to itemize all possible risks
  • Planning: Planning for contingencies as part of the project plan; implementing controls as needed.
  • Derive Safeguards: Creating specific contingencies (aka "fallbacks") to address risks if they arise.
  • Monitor: Regularly monitoring the project to determine if any expected or unexpected risks occur.

Principles of Risk Management

• Value Creation: Risk management process should create positive value.
• Integrate with Organization: Should be a fundamental part of organizational processes.
• Decision-Making: Risk assessments and management should inform every decision.
• Embrace Uncertainty: Explicitly and systematically addresses uncertainty.
• Systematic: It should be well-structured and organized.
• Transparency: Should be inclusive, transparent, and easily understood.
• Adaptability: Dynamic and agile to change as a project progresses.
• Continuous Improvement: Regularly reviewed and improved upon.
• Best Available Info: Utilizes the most up-to-date and relevant information.

Risk Management Plan Content

• Policy Statement: A clear outline of the organization's risk management policy.
• Scope & Objectives: Specific details regarding the scope and purpose of risk management within the organization.
• Unified Language: Consistent terminology and definitions for risk management.
• Integration: Aligns risk management with other management practices and procedures.
• Assessment Criteria: Definite criteria for assessing risk based on consequence and likelihood ratings.
• Context Description: Defines the internal and external environment in which the agency operates.
• Risk Analysis List: A comprehensive inventory of analyzed risks.
• Treatment Plan: A detailed plan for managing identified risks.
• Reporting Protocol: A clear breakdown of risk reporting procedures.
• Monitoring and Review Programme: A framework for continuous monitoring and review of the risk management program.

Embedding Risk Management

• It should be integrated into every aspect of an organization's processes and practices.
• This approach prioritizes relevance, efficiency, and effectiveness.