What are some common threats to risk management and how can you identify them?

1 Human factors

One of the biggest threats to risk management is human error, bias, or negligence. People who are involved in risk management activities, such as risk identification, analysis, evaluation, or response, may make mistakes, overlook important information, or act unethically. For example, they may underestimate or overestimate the likelihood or impact of a risk, ignore or conceal a risk, or choose an inappropriate or ineffective risk response strategy. To identify and prevent human factors, you need to establish clear roles and responsibilities, provide adequate training and guidance, foster a culture of transparency and accountability, and use objective tools and methods to support risk management decisions.

2 Organizational factors

Another threat to risk management is organizational culture, structure, or strategy. These factors may influence how risk management is perceived, prioritized, or implemented within your organization. For example, your organization may have a risk-averse or risk-seeking culture, a rigid or flexible structure, or a short-term or long-term strategy. These factors may affect how you define your risk appetite, criteria, or tolerance, how you allocate your resources and authority, or how you align your risk management objectives with your organizational goals. To identify and address organizational factors, you need to conduct a risk culture assessment, review your organizational design and governance, and align your risk management strategy with your organizational strategy.

3 Environmental factors

A third threat to risk management is environmental uncertainty, volatility, or complexity. These factors may create new or emerging risks, change the nature or magnitude of existing risks, or reduce the effectiveness of your risk management actions. For example, you may face risks related to political, economic, social, technological, legal, or ecological changes or disruptions that are beyond your control or prediction. To identify and cope with environmental factors, you need to monitor and scan your external environment, use scenario planning and simulation techniques, and adopt a proactive and adaptive approach to risk management.

4 Methodological factors

A fourth threat to risk management is methodological inconsistency, inadequacy, or obsolescence. These factors may affect the quality, reliability, or validity of your risk management processes, tools, or outputs. For example, you may use outdated or incompatible risk management standards, frameworks, or models, apply inappropriate or insufficient risk management techniques or methods, or produce inaccurate or incomplete risk management reports or documents. To identify and overcome methodological factors, you need to update and harmonize your risk management standards and benchmarks, select and apply suitable and sufficient risk management techniques and methods, and ensure the accuracy and completeness of your risk management reports and documents.

5 Behavioral factors

A fifth threat to risk management is behavioral resistance, complacency, or fatigue. These factors may affect the motivation, engagement, or performance of your risk management stakeholders, such as your team members, managers, clients, or partners. For example, they may resist or oppose your risk management initiatives, become overconfident or indifferent about your risk management outcomes, or experience stress or burnout from your risk management activities. To identify and mitigate behavioral factors, you need to communicate and consult with your risk management stakeholders, provide feedback and recognition for your risk management achievements, and balance and support your risk management workload and well-being.