Risk analysis
Risk analysis is the recognition, evaluation, and ordering of uncertainties that may affect goals, decisions, or actions.
Definition
Risk analysis supports decisions in conditions of uncertainty. It includes the identification of risks, assessment of their probability and impact, prioritization and selection of responses: avoiding, limiting, accepting, transferring or preparing an emergency plan. In modern management, risk does not only mean threat; may also include opportunities arising from uncertainty.
Key ideas
- Uncertainty about the goal
- Probability and impact
- Preventive and emergency actions
Practice and life
Create a risk register with three columns: risk, rating 1-5, preventive action. For the highest grades, prepare a plan B.
Common misconceptions
It is a mistake to focus only on spectacular risks and ignore frequent, small problems. The risk owner, the review deadline, and the distinction between a threat and a possible opportunity are often missing.
> Risk does not disappear from fear; decreases from naming, assessing and preparing the reaction.
> — Guru Element
Questions for self-reflection
- Which risk has the greatest impact with realistic probabilities?
- How can I reduce the likelihood of this risk?
- What is my response plan if the risk materializes?