Methods for identifying risks
You should approach risk management in a systematic way, as a CFO would, by using a three-step process. The first step is to identify the risks. During this phase, you need to explore any possible threats, and how they might happen. Next, estimate the risks. This involves analyzing the consequences and severity of the risks. The final step is to respond to the risks by developing risk treatment plans and applying them.
The aim of the first step — identifying risks — is to discover an organization’s exposure to threats. You need to define any problems that can impact an organization’s chances of success. Make sure you have the right people in place to help you identify the risks. These could include technical experts, customers, and project managers.
Once you’ve got the right people in place, you can use a number of techniques to identify risks:
- one-on-one meetings, which could be held with key stakeholders in your organization to get a more in-depth description of significant risk factor,
- brainstorming sessions, which allow for more open communication between different employees, and which could be used to generate new ideas about potential threats,
- questionnaires, which are an effective way of getting employees to identify specific risks in their own areas of work and rate their organization’s existing controls,
- industry benchmarking, which could be used to examine best practices other organizations apply to mitigate potential risks,
- scenario analysis, which is a method of analyzing possible future events that could have serious consequences,
- auditing, which involves an evaluation of an organization’s processes by an external party to highlight any issues that may have been overlooked.
To be able to identify risks, you must have detailed knowledge of your organization and the market where it operates. You need to understand the legal, social, political, and cultural environment your organization is part of.
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