5 Steps of Risk Management Process
Muhammad Omair PfMP, PgMP, PMP, ACP, ACE
Leader | Sr. Project Manager | Business Consultant
To every rise, there is a fall, and to every success, there is a decline. Similarly in businesses, if one phase is successful, the next could be a failure. So that is why, in order to bear any loss, business conducting bodies should be mentally prepared all the time due to any accidental or economical reason. But still, without denying the fact, no one would like to let every distracting factor hit his business.
There are Five Steps of the Risk Management Process, which by taking; you can assure a visible decrease in the chance of any such monitoring crack.
The risk lies everywhere, in any project, organization run, or operations of any scale, which might be due to natural circumstances or due to human error. But there can be one important thing that can assure less destruction and that is called risk management.
A risk management plan has become an important part of large organizational cultures and it nullifies the concept of total damage bearing in any case. Risk management operated on the data provided regarding all the current going activities of a business and it takes in account all the nearby sustaining risk factors which can probably be a cause of damage to a business process.
Five Steps of Risk Management Process
- Identification of risk
- Analyzing of risk
- Evaluation of risk
- Make plan
- Implementation and Monitoring
Identification of risk. In this step, we identify the risk and the expected outcomes that our project or business could face. There are different ways to find the risk that’s why a risk plan is always made before launching a project.
Analyzing the risk. In this phase, we analyze the risk to find out its effects on your project as well as our goals.
Evaluation of risk. In this step, we evaluate the risk potential, its type, and density that help us to make a perfect risk plan for our project.
Make plans. In this step, we make plan according to the information that we gather in the above four steps. For this purpose, we can use risk management excel templates too.
Implementation and monitoring. In this step, we implement that plan and also monitor whether the plan is working or not as well as we can control it with several project management tools and templates.
Risk management evolved as a proper research field a few decades ago and now it is considered an important sector of organization setups. The opportunities for risk management are though less. Still, they are one of the highly paid jobs in the world as they foresee the upcoming hurdles in your business and provide you a chance to look early and draw a solution to damaging situations.
The risk management process itself carries some standard parameters to evaluate the current standings of business and forecasts the challenges in the coming times.
It caters to the operations from the economic point of view and sees how the existing economic status of the market approaches the business; moreover, it redefines the working boundaries to avoid the crucial phase and tells about the right decisions to take at the moment. It also seeks for accidental risks to the business and devises the savior strategy to go smooth without facing any hurdle in the risk process.
Though the damages have to affect the business at cost, they do, but by planning a protective slot and by proper risk management study, the magnitude of the loss can be decreased through various tools. Now, how to evaluate the probability of risk and its counter-strategies are done by some templates which already have standard scales to measure the risk factors and the strength of protective shields against them.
For now if one does not have any idea how to monitor things and how to evaluate the security of currently applied policies and strategies, he can use risk management excel templates which will require certain information and will evaluate the possible risks which have been gathered around the business.
These Five Steps Of Risk Management Process have classified formulas that mention the probability of loss or profit about every step you take in your business and promise a less magnitude of loss.