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The Risk Management Process to Follow

August 27 2010

There is the right and wrong path when following a risk management process. What some company’s fail to realize is that by not having a risk management plan in place is a path. The wrong path will have pot holes that can swallow a business up and make life very uncomfortable of the stakeholders of the business.

This is why nearly every success business has a documented risk management process in place that is followed. This set of documents has to be created. Most businesses are finding the creation of a plan is easier and more complete when a project management plan program is utilized.

With these programs the risk management process is developed with the aid of templates and examples from real business plans that have worked in their industry. These preformatted temples were deigned to make the process easier.

The first step in every risk management process is the proper identification of all possible risks. This is a very important step and has to be thourghly completed. This has to include all known risks that are associated with your particular industry. There should also be some thought into the unknown risks and what they might be.

The second part of the risk management process is to determine the probability of the identified risk coming in contact with your business or project. With those two factors known, the plan needs to move onto the next level. This is the evaluation of impact each risk will have on the business. Even if the probability of a risk impacting your business is slight, if the impact has a large negative possibility, it should be addressed. This process is prioritizing the risks.

With the priority established, the elimination part of the risk management process can commence. Most risks and their impact cannot generally be totally diminished, but that is the goal. What occurs most of the time is the risks and their impact are diminished to the point that the business or project can survive the event.

What has to be realized is that the risk management process is a continuous plan of action. As long as a company is in business, there will be risks associated with it operations that need to be addressed.