Risk Management - Key Steps in the Risk Management Process
3 important questions on Risk Management - Key Steps in the Risk Management Process
What are the five key steps in the Risk Management Process?
The five key steps in the Risk Management Process are:
Step 1 Identify risks
Step 2 Assess risks
Step 3 Prioritize risks
Step 4 Formulate risk responses
Step 5 Monitor risk responses
Step 1 Identify risks
Step 2 Assess risks
Step 3 Prioritize risks
Step 4 Formulate risk responses
Step 5 Monitor risk responses
What happens in Step 1 “Identify risks”?
Every risk that could affect the achievement of the organization’s objectives must be considered. Not every single risk, only those that could have an impact.
What happens in Step 2 “Assess risks”?
Every risk identified must be assessed, and quantified as a combination of, two factors, namely “probability” and “potential impact”.
The probability = the likelihood of occurrence
The potential impact = the result (positive or negative)
Multiplying both factors = the expected value of a loss due to risk exposure.
The probability = the likelihood of occurrence
The potential impact = the result (positive or negative)
Multiplying both factors = the expected value of a loss due to risk exposure.
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