Why I Love Risk Management

I love ocean swimming, bush walking, teaching children to plant trees, practicing meditation, making (and eating) delicious food and risk management. I know right, I’m a bit weird. Why add risk management to a list of wholesome activities? Well, it’s an extremely valuable tool and one that has been a game changer in my environmental career. Now let me be clear, having a love affair with risk management does not necessarily equate to being risk averse. If I had an aversion to risks, I wouldn’t have travelled widely as a solo woman, nor lived in multiple countries or left well-paying jobs to follow my passions. Managing risks is an opportunity to be reflective, proactive and considered. It’s an integral part to managing projects, programs, organisations and of course, it's essential to supporting not-for-profit organisations to thrive.

Earlier in my career, risk assessment presented as a fairly serious topic, as I applied my university learnings to my first job at Logan City Council, where I assessed flood risk on development applications. If you wanted to build a house or commercial premise in a flood affected area, your application would come to me for review. This set me up well for undertaking environmental risk and impact assessments for proposed wind farm and road developments in New Zealand and Scotland as well as undertaking copious health and safety risk assessments before doing field work. And overtime, I gradually realised how beneficial the process is.

While it might seem cumbersome, the process for assessing risk is actually quite straightforward and it can be hugely insightful. Here I’ll step you through the basics.

In your project, program, organisation, etc, what is something that may (or may not) happen that would affect the outcome of your project (replace with whatever you are considering)? It’s sometimes useful to consider these in categories, e.g. environmental, financial, reputation, health and safety, legal, etc. You can also examine what might cause that thing to happen.

Then contemplate what might happen if that thing did actually occur (consequence) and how likely it is that it will eventuate (likelihood). My favourite example to demonstrate this process is an oil spill in the ocean. Following this simple framework:

• An oil spill might happen when a ship carrying oil is transporting it from A to B (risk)
• If an oil spill did occur, it may cause harm to fish and other aquatic organisms and wildlife, affect water quality, prevent people from swimming in the ocean, etc (consequence)
• How likely is it that the oil spill will actually happen (likelihood). The likelihood may change due to a number of factors like location, type and age of ship, maintenance of ship, safety procedures, etc. These factors are called hazards.

The next step is to combine the consequences and likelihood to give a risk rating or level. You'll need a risk matrix to figure this out. There are plenty of free templates online, but I recommend creating/adapting one that is fit for purpose for your organisation/project. Once you have your risk level, this is where you can get creative and develop practical initiatives to avoid, eliminate or mitigate the risk. Fun!!

Using our oil spill analogy, we could eliminate the risk if the ship did not carry oil, or if the ship did not travel at all. We could avoid potential consequences on a particular location by re-routing the ship. Or we could mitigate the risk by replacing the oil with a substitute that would be less harmful if spilled or adhere to strict procedures on the boat to reduce the likelihood of a spill happening. These are called control measures. Then you evaluate whether your control measures are effective in reducing the risk. Come back at regular intervals (e.g. monthly) to re-evaluate the risks and see how you are going. Has the risk increased or decreased? Do you have further information about the risk? Is there anything else you could do to minimise the risk?

You can apply this process to pretty much any process in your organisation or project. What’s the risk that you’ll not be able to finish your project on schedule? What’s the risk that a volunteer will hurt themselves at your next event? What’s the risk that your organisation won’t have enough resources to complete the project? What's the risk that all those trees you've planted will die?

Of course, there's many naunces and complexities if you want to get serious with risk assessment, for example you can consider your organisation's appetite for risk and what level of risks you will and won’t tolerate. But I suggest keeping it simple for starters, as it's better to have a simple, effective process than none at all. If you are curious about my passion for risk management and want to delve deeper into this process, check out these resources:

• Read Best Practices for Risk Management in Project Planning by MyGenieNetwork.
• Join the LinkedIn risk management group.
• Read more about risk management plans from the Australian Institute of Company Directors

In my experience, risk management has equipped me with a defined process to actively minimise risks before they become issues and to communicate to decision makers the potential reality of a situation before it eventuates. When done regularly, it can help to adapt and evolve a project or organisation, supporting continual learning and adaptation. With all these amazing outcomes, what's not to love about risk management?!