The Do’s & Don’ts of Managing Risk

People manage risks every day but most of the time are unaware that they are doing it. As in everyday life, risk management in any work-related sector is the process of identifying, analysing and managing risks that could arise and the best approach is to keep it simple.

There are 3 main components of risk management

• Risk identification – simple review of an activity to highlight risks.

• Risk assessment – An evaluation of the risks to determine how likely they are to occur and also how big an impact they could have if you don’t take steps to manage it.

• Risk mitigation – putting steps in place to manage the identified risk.
A risk can be:

• A threat (negative) or,

• An opportunity (positive)

Threats & opportunities both need managed to enable the best outcome.

All businesses & projects have risk as they are trying to achieve targets that are unique, constrained, based on assumptions, performed by people and subject to external influences.

Andy Sutherland, founder of Prism Energy who provide digital solutions & consultancy services to help companies manage projects & risk, explains, “I started the business to help people realise that effectively managing risks will help improve performance & results. Risk management really is a simple process if followed and managed correctly, we just need to reaffirm the three-step process, Review – Identify – Manage.”

Andy continues, “Our Prism Project Management system is now used by thousands of people around the globe and has been built to give people a simple platform to manage key elements of a project including risk.”
Andy shares his top ‘Do’s & Don’ts’ to consider when managing risk:

DO - be clear on your targets to ensure a focused approach to identifying risks. This will massively improve how effective you are at achieving your targets

DO – score risks honestly in terms of likelihood & severity. All too often we see risks that are massively over scored.

DO – discuss risk at all levels in the business.
A successful approach to risk management has to be led by management to ensure everyone is engaged.

DO – get an external input. It’s easy for teams to convince themselves as a group that everything is ok and miss something important. Using someone with relevant experience will bring the most benefit.

DO – look to improve your process regularly. The more effort you put in the more effective you will become.

 DO – have an agreed risk matrix that is suited to your business. If the scoring criteria is unsuitable it will incorrectly either highlight or downgrade risks.

 DO – be proactive in how you manage mitigations. If you’re not going to do work to manage identified risks then there’s no point doing it. Tracking progress of actions will drive you to better performance levels.

DON’T – forget that the most successful companies are great at managing risk. It creates a competitive edge & makes them more resilient.

DON’T –  forget that risk management is a simple process. Review – identify – manage.

DON’T –  just focus on negative risks.
A risk can be a threat or an opportunity & most businesses ignore the opportunities completely.

DON’T –  use spreadsheets if you have more than one risk register in your company. There are systems available that will improve how you manage & communicate risk within your company that will save you time & don’t cost a lot.

DON’T –  forget to read ISO 31000 for guidance and advice on effective risk management strategies. This will help you plan how to improve your process for managing risk including introduction of advanced methodologies like probabilistic analysis.

DON’T –  let your business view risk management as a drag or a tick box process. This will lead to frustration within the company and a poor output.

DON’T – use the risk management process to try and artificially put focus on a certain risk. This will waste the time & resources of the company.

Andy Sutherland has experience in managing a number of projects in the North Sea and provides consultancy advice to many large capital & decommissioning projects. For further information on Prism Energy and how they can help your company manage projects & risk, visit: https://www.prismenergy.co.uk or call 01224 061786.

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