Please enable JavaScript.
Coggle requires JavaScript to display documents.
4.3 Strategic Risk Management Process - Coggle Diagram
4.3
Strategic Risk Management Process
Live Risk Register
A risk register is a method of recording, communicating and managing the risks associated with a project.
Likelihood/Probability for strategic risk management
Possible
Probable
Remote
Almost Certain
Improbable
(Impact/Severity for strategic risk management)
use a
five point scale
for measuring risk.
negligible
inconsistent delivery of business requirements
partial delivery of business requirements
threat to future trading
threat to business survival.
The impact on the organisation may be evaluated in three main categories
Safety
Safety goes beyond Health and Safety at Work and includes environmental damage and/or breaches of statutory duty (ie legal requirements).
Commercial
Commercial relates to the levels of losses, usually expressed in financial terms from uncontrolled or unmanaged risks.
Reputation
Reputation risk could include: high profile publicity with protestors or objectors; an adverse effect on the share price, on clients, on the organisational image, or restrictions or exclusions from work in the future.
Opportunities
Part of the strategic risk management process involves identifying the potential benefit these opportunities can provide.
You can see that opportunity and risk are categorised in the same way using a traffic light system and their likelihood is stated as part of the mapping process.
Socio-technical hexagon
Socio-technical theory is based on the idea that several elements on a project interconnect and interact to create complexity (Clegg, 2017, p.4).
Use in Assessment
These elements are:
people
technology
infrastructure
processes
goals
culture
What is risk appetite?
Risk appetite is the capacity or desire to take on responsibility for risk.
three main approaches to risk
Risk neutral
In a major project making profit most principals are risk neutral.
Risk averse
One common method for assessing risk averse behaviour is the use of utility theory
Risk Takers
On major projects few, if any clients (referred to as principals) are risk takers.
What is utility theory?
calculating utility values: the values reflect the risk nature of the principal.