Evolution of Risk Management
Traditionally risks were viewed as a series of single elements. Risk management was seen more as a reactive process and focus was laid on solving only a specific problem. Gradually, professionals and organizations realized the need to have a more complete Risk Management process. Today, Risk Management involves proactively identifying risks, carrying out suitable qualitative and quantitative analyses, and then developing suitable response strategies in order to control the risks.
As the need for a more complete Risk Management process increased, new principles, frameworks and processes were introduced by bodies like ISO, PMBOK and PRINCE2.
The most common steps in Risk Management include
- Risk Management Plan
- Identification of Risks
- Risk Analysis ( Quantitative & Qualitative )
- Risk Response Strategies
- Control Risks
Importance and Usefulness of Risk Management
Risk Management is one of the drivers of success and competitiveness for an organization from a Project, Program, Portfolio or Operations perspective.
Benefits of Risk Management Framework
- Strategic Business Planning
- Cost Efficiency
- Promotes Continuous Improvement
- Fewer shocks and surprises
- Quick grasp of new opportunities
- Enhancing communication between departments in an organization
- Reassuring stakeholders
Risk Management in today’s Organizational world
In today’s world, the complexity of risks has raised stakeholder’s expectations for risk management.Most organizations today have set up their own Enterprise Risk Management (ERM) framework in order to understand and respond to business uncertainties and opportunities. ERM enhances resilience by improving decision making, strengthening governance and supporting a risk intelligent culture.
Hence, it is important for organizations to continue focusing on their ERM to remain competitive and resilient in a challenging global market.