The five steps of an effective risk management process

Words by Megan Avard, Founder and CEO

Without even noticing it, risk assessment forms part of daily life. On a personal level, risk management tends to be done on a split-second basis, informed by lived experiences and gut feelings – but this does not work on a business level. 

Every project comes with potential risks, both internal and environmental, and when you have to rely on external suppliers and contractors, those risks multiply exponentially. If those risks are not identified and managed early, they can lead to blowouts in cost, time and scope. 

Man using SurePact on an iPad

When you are equipped with the tools needed to identify and deal with potential risk, you are able to make informed and strategic business decisions. Problems won’t be discovered too late and potential risks will be considered in advance, allowing you to put a plan in place. 

While you can never eliminate risks completely or plan for every possibility – and that certainly isn’t the aim or purpose of risk management – you can plan ahead and minimise potential negative consequences or losses that could occur due to foreseeable risks. 

Risk management is an ongoing process of identifying, treating and managing risks, and it requires time and resources to establish an effective risk management process. This is something you want in place pre-project, to protect you as the project progresses.

Whether you choose to undertake risk management in a manual or digital environment, the basics stay the same. The real difference is how efficient and effective your risk management process can be. 

The SurePact solution can digitally transform manual and tedious risk management processes, helping to manage problems before they occur, assisting in business stability and growth, guiding resource allocation and creating a more agile and responsive project team.

The risk management process

While there is no one-size-fits-all approach to risk management, there are five steps that every business should be taking. 

  1. Identify the risk

There can be no risk management process if the risk itself is not first identified. This step is when members from across the organisation come together to identify internal and external risks across departments to gain the whole risk picture of the project. 

It is important here to utlise the knowledge and experience of your whole team, as there are many different types of risks, be they with regards to contracts, budgets, regulatory requirements and so forth. 

If this is undertaken manually it can quickly get complicated, and information can be missed. Utilising SurePact allows the risk management process to be accessible in one place, and visible to every stakeholder in the project. Vital information is not being gatekept and request time is being ruled out.

Having a database of risks not only helps you manage current threats, but serves as a reference point on past projects, providing information that would not be easily available otherwise. 

  1. Analyse the risk 

Once a risk has been identified, it then needs to be analysed to measure your exposure to it, including the scale and scope of the risk. It may be helpful to ask yourself ‘How likely is this risk to occur? How severe/serious is this risk? What impacts will this risk have on the project? How many parts of the project will be impacted by this risk? 

SurePact provides a full picture of the risks at hand, helping you to not only analyse the risk but uncover any common issues across a project or several projects and redirect course as needed. 

  1. Evaluate/rank the risk

Depending on your analysis, some risks will clearly be greater than others. Risks that may cause some minor inconveniences should be rated lowly, whereas risks that could have a large fallout should be rated highly. 

Ranking risks helps an organisation prioritise and navigate risks and risk exposure appropriately, helping to reduce business vulnerability. 

  1. Treat the risk

Again, not all risks can be eliminated, but at the very least, they need to be contained to the greatest degree possible. When you get to this step, you have already laid the groundwork of your risk management process, which should set you up for success. 

The best way to treat risks is to make them visible and accessible to key players so strategies can be developed and plans put in place. 

If this is done manually, it can be time-consuming and complex. Within SurePact, privileges can be changed to allow access to those who need it, keeping communication lines open and enabling risks to be reported back to stakeholders

By taking the time to do this process properly, you’ll slowly build a database of risks that popped up during the course of past projects, helping you to better anticipate hazards and take a proactive approach to future projects. 

  1. Monitor and review the risk

Risks, especially external risks, need to be monitored and reviewed regularly. These risks are unstable, and even with the best risk management process in place, they can be unpredictable. 

Instead of relying on people power to be constantly across risks, SurePact frees up this resource by providing a 360 degree view of risks, making risk management more efficient and accurate.

Managing risks with SurePact

These processes must be flexible, as risks are, by their nature, unreliable. But one thing remains unchanged – identifying and understanding your risks is important. You must know what your tolerance for risks is, so you can prepare for them accordingly.

SurePact allows for deadlines to be met with full transparency, accessibility and visibility of risks by providing real-time information updates, a document repository, responsibility assignment matrices, task assignments, communication between key stakeholders and accurate budgeting and forecasting.

A business that can predict risk will always be at an advantage. Start mitigating your risks at www.surepact.com