Thomas M. Bragg on Business Risk Management

In Part I of this series, I described the outcomes of risk evaluation. (It got a little long. Sorry.) In this post, let’s start digging into the individual steps.

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What’s Involved in Evaluation?

Evaluating your identified risks involves 4 different activities. As you will see, it’s a lot easier to do the evaluation if you are working in a spreadsheet or some other computer based application. Here are the four steps, in order:

1. Estimating the probability of the risk occurring
2. Estimating the potential impact if the risk does occur
3. Calculating the “probable impact” of the risk
4. Evaluating your business’ sensitivity to the risk Read the rest of this entry »

As you recall, the 3 steps of business risk management are:

1. Identify your risks
2. Evaluate your risks
3. Plan for your risks

I’ve written a couple of posts (here and here) about the first step – identifying risks and creating your risk inventory (list of risks and opportunities). I’ve also written about the related topic of identifying your opportunities. It hasn’t been an exhaustive tutorial, but hopefully there has been enough information presented to help you gain a basic understanding of how to get started.

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Now let’s start talking about evaluating the risks. (Note: Whenever I write “risks” in this post, I am also referring to opportunities. They are evaluated in exactly the same way.) In this post I’m going to describe what results from the risk evaluation exercise. The next post will get into the specific actions involved in the evaluation. Read the rest of this entry »

About a week ago we talked about how to identify your risks. I asserted that “almost every risk comes from assumptions” and we, as business owners/managers, make A LOT of assumptions. Where do we start?

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It may be helpful to think about all of those assumptions and associated risks by breaking them down into 3 broad categories.

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1. Budget (financial) Risk
2. Schedule (calendar) Risk
3. Quality Risk

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Let’s take a brief look at each of them…

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As I’ve written previously, there are three basic steps in risk management. The first step is “Identify the risks”. Easy enough, right? Not if you don’t know what to look for. What is a risk? Where do they come from? How do I find them? Let’s take a look…

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Risk management is arguably one of the most under-utilized business tools available to owners and managers today. It involves planning for potentially bad events before they happen. Risk management is a technique for predicting what unplanned events might occur and what the impact of those events might be. It’s also a technique for pre-planning how those events can be avoided or how their impact can be minimized. Almost every business does a limited amount of risk management – usually in the form of insurance – but very few businesses actively manage their risks.

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So what kind of risks am I talking about? They run the gamut. The insurance I mentioned usually deals with financial risks associated with natural disasters, fire, injury or death, accidents, etc., but there are many, many more risks facing your company.

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