Istria - Risk Management Overview
Risk Management has become a hot topic in recent years. Various high profile corporate failures (Barings, WorldCom, Enron etc) were caused by the failure of these companies to identify, assess and effectively control the risks these organisations faced.
At the same time, more and more companies have found that large-scale change programmes have consistently failed to deliver the expected benefits identified in the business case. Budget over-runs are commonplace and the inability of projects to deliver on time has almost become the norm.
Project failures can lead to problems ranging from stock-outs to lost contracts through to the need for disaster recovery actions. Only a few of these failures make the headlines, but the cost is always felt.
The common factor running through these examples is the failure of organisations to manage risk effectively. By investing a little time and effort, however, organisations are able to identify risks at the outset and implement mitigation strategies to reduce the probability of the adverse event occurring, or the size of impact should it occur.
Risks occur at every level of the organisation. As a result, risks should be managed at:
- Strategic / Corporate level
- Department / Divisional Level
- Portfolio Level
- Programme Level
- Project Level
Risk types are normally determined according to a common "risk language" or "risk glossary". While general principles can be transferred, the risk language is likely to be flexed from one organisation to another to reflect the environment in which they operate.
Typical risk types may be:
- Strategic Risk
- Operational Risk
- Legal / Regulatory Risk
- Credit Risk
- Market Risk
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