Why You Need To Know About Risk Management

By Author: Jonathan Trott
Total Articles: 77
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Even when machines make errors they can be traced back to humans. A human might have made an error programming the machine or setting it up. Making errors is something we shouldn't be ashamed of, after all we tend to forget, are receptacle to stress and emotions often interfere with our rational thinking. However, there is no one type of errors. The type of error this article is concerned about is what can be called silly errors. These are errors that could be discovered and prevented.
Risk Management is the tool that will help you to identify the possibility that errors will occur in your work and will guide you in a systematic way to control them. However, before going further explaining what risk management is, consider the following examples of errors: mistakes in the design of your company or personnel site, wrong pieces manufactured for a product prototype, failure to send enough invitation to your wedding, etc.
Risk management has three main elements or stages that will take you from identifying the error to controlling them which are Risk Identification, Assessment and Control.
The first element ...
... is Risk Identification, which is the thinking you make of what can go wrong in your situation or project. This is a look into the future, where you try to intellectually guess what might go wrong with your project or situation. The best way to identify risks is to use brainstorming which is basically to think aloud with your self or other people of possible unfavorable scenarios. After that you should single out the possible reasons for such bad occurrences. For example, if you plan for a family dinner, then a possible bad scenario is that food is not finished in time. This can be caused by malfunction in the stove or insufficient food to be cooked.
The second element is Risk Assessment where you try to identify which risks poses more potential harm to your future situation and single them out from risks that even if they occur will have minimum effect. Again you need to use thinking and brainstorming to asses risks. For example, in the dinner project chances are you will identify many possible risks leading to errors, but you will not have enough time to try to control them all so you need to look for the most dangerous ones. Hence if you own an old stove, then there is a bigger chance it will fail and as such you need to attend to this risk.
The third element is Risk Control where you think of possible solutions you can make beforehand to control risks and thus avoid errors. For example, you might identify that a malfunction in your stove will cause your family dinner to go wrong. Hence you can take different control options, like calling a maintenance company to check your stove or checking with your neighbor if you can use his/her stove in case yours fail. There are many strategies that can be used to control risks which are trademarks of risk management like risk acceptance, transfer and elimination.
If you are interested in knowing more about risk management then check out the book titled Study Guide for the Risk Management Professional Exam. It will explain to you the full process of risk management and will enable you to take an exam to become a certified risk manager.
Find more information relating to risk, and risk management here.