Risk management to prepare for a crisis
Effectively preparing for a crisis is contingent on the risk management measures you are able to put in place in advance, and the lessons you learn from previous crises. There are a number of methods you can employ to ensure you are as prepared as you can be:
Brainstorming: To begin the brainstorming process, start with the possible risks that could impact your business. Gather information from whatever credible sources are available and ensure you are well-informed. Anything that can provide insight into issues that might occur during the execution of the project should be considered. Once you’ve done your research, start brainstorming within your team or stakeholder/ partner network. Examples might be severe weather during outdoor activities, contamination at a restaurant or poor product quality in a retail shop.
Root Cause Analysis: Root cause analysis is a systematic process used to identify the risks that are embedded in a business or project. It enshrines the notion that good business is not just responsive but preventative. Often root cause analysis is used after a problem has already come up. It seeks to address causes rather than symptoms. But it can be applied to assessing risk by going through the goals of any root cause analysis: What happened? How did it happen? Why did it happen? What can be done to better prepare if it were to re-occur? Once those questions are addressed, develop a plan of action to prevent it from happening again.
SWOT: SWOT (or strengths, weaknesses, opportunities, threats) is another tool to help with identifying risks. To apply this tool, go through the acronym. Begin with strengths and determine what those are as related to your business. List the weaknesses or things that could be improved or are missing from the project. This is where the likelihood of negative risk will raise its head, while positive risk comes from the identification of strengths. Opportunities are opened up by strengths and positive risks, while threats are negative risks.
Once you have identified potential risks you will need to understand how pertinent they are to your business. Ask the questions: What would the impact of this risk be to my business? How likely is this risk to occur? Once answered you can map the materiality of this risk accordingly.
- Low impact/low probability: Low level, and you can often ignore them but be aware of how they may shift.
- Low impact/high probability: If this happens, you can absorb the problem and move on. However, you should try to reduce its likelihood.
- High impact/low probability: This is an unlikely event but one that would be consequential if it were to occur. You should do what you can to reduce the impact it will have if it does occur, and you should have contingency plans in place just in case of an incident.
- High impact/high probability: This is of critical importance and among your top priorities. Any risks in this quadrant are ones you must pay close attention to.