Six step for effective Risk Management
Risk management follows a defined process that includes the following steps:
1. Develop a risk management team
2. Identify assets
3. Identify threats
4. Perform risk analysis
5. Perform risk mitigation
6. Monitor
The first step begins by developing a risk-management team, which is responsible for the risk assessment process. The risk-management team needs support and funding from senior management and should be led by someone with strong project-management skills. Once established, the team can begin work on the second step, the task of identifying assets. Companies must identify assets before moving on to the next step of the risk-management process. As an example, Coca-Cola surely has some value in the original formula for Coke and must protect it.
After inventorying assets, the risk-management team can move on to the third step, identifying threats. Once threats are identified, risk assessment can be performed. Risk analysts can base their assessment on dollar figures or can use nondollar values. Regardless of the method used, the idea is to rank the threats in some order to determine what requires immediate action. Some threats might have a high impact but a very low level of risk. Other threats might present a high level of risk but result in a very low impact. The idea is for the team to identify high-impact, high-risk concerns and focus on those items. As an example, a company based in Galveston, Texas would most likely consider a hurricane as a high risk, high impact item. The island has no point of land that is more than 14 feet above sea level and the Gulf of Mexico is prime area for strong storms. This same approach should be used during audits to ensure that audit time is spent on areas with the highest risks.
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