Risk management in business is essential to control the possible events to take place in the near future and it is a proactive one. In fact, the concept remains embedded in any particular project planning process and it not only reduces the likelihood of any event but also its extent. Solid risk management is an essential thing for any business, as it increases your chance to achieve long-term success.
Include Essential Items to Make Risk Management Plan
Every business should essentially pose an effective risk management plan. However, the way to do so varies widely in accordance with the specific company’s requirement. For this, you have to include a few essential items in your plan, which are-
- A list consisting of individual risks
- A rating to each of the risks in accordance with their influence and likelihood
- Proper assessment of already existing risk controls (article)
- An effective action plan
Analyze the Effectiveness of Your Actions
Next, you have to analyze the overall effectiveness of your actions i.e. the extent, up to which things go on well or in favor of you. Here also, you may opt for the simple and easy five-point scale to analyze your actions as-
- Non-existent or very inadequate
- Inadequate action
- Satisfactory action
- Strong and bold action
- Highly strong
Qualitative Analysis to Calculate the Probability of Your Risk Condition
Besides the five-point scale mentioned here, you should perform quantitative analysis to check or calculate the probability of your risk condition and the impact from the respective risk. Once you succeed to perform this, you can assess the magnitude of such risks. For this, you have to adopt the weighted risk factor technique and use WRF formula to calculate the risk.
Decide on Handling Your Business Risk
As a business owner and/or manager, you have to decide on the essential steps to handle your business-related risks, so that you may manage them in the best way as possible. For this-
Apply Risk Formula
To deal with the project risk effectively (article), you may use a common formula i.e.
Risk = Threat x Vulnerability x Consequence. Besides a mathematical formula, this acts as a model for demonstrating a risk concept. Most of the experts also refer the first part of the risk formula i.e. Threat x Vulnerability as Likelihood or Probability i.e. a rough estimation to describe the chance to identify any mentioned vulnerability based on any threat factor. Even though you may limit some of the factors, the threat factor in most of the cases remains out of your control. Rating, in this case, depends on many values, which include-
- An attacker’s skill level
- Actor’s motive
- Opportunity i.e. whether the respective attacker has enough access and required knowledge
- Abilities of your opponent, which you face, which include his/her available financial resources
An attacker may discover or notice any vulnerability based on different methods, which include scanning, the disclosure of information and reconnaissance. Likelihood of any vulnerability discovered and exploited in accordance with its-
- Ease of its Discovery
Is there any application or service banner for indicating the vulnerability of an application?
- Ease of its Exploitation
Secondly, you have to analyze the ease of exploitation associated with any risk in your business. This means you have to check whether you can do so with easily usable and automated scripting tools or it requires a series of various events difficult to accomplish or achieve.
- Detection and Awareness
Next, you have to confirm whether the risk involves any known vulnerability. Simultaneously, you have to analyze whether you can detect or identify attempts to exploiting the vulnerability and whether the respective organization is able to take countermeasures to block such attempts.
While you should evaluate vulnerabilities, you should never put a limit on yourself to various system vulnerabilities. You have to make sure considering the human factor to operate an environment with no system vulnerabilities but with a particular user base capable to operate email attachment without restriction to consider as a vulnerability.
Assessment of the Impact of Risk’s Vulnerability
Vulnerability i.e. the last part of the risk formula highlights the impact or consequences of any successful attack by any threat actor. You may calculate vulnerability based on two major factors as mentioned here-
- Technical impact described by the integrity, confidentiality, accountability, and availability of particular data
- Business impact described based on business impact analysis, which accounts for noncompliance and financial damage due to legal or privacy implications and breach.
Thus, the combination of the impact and the likelihood mentions the severity associated with any business risk. You may put a limit on consequences and thereby, severity related to intrusion based on imposing the important security policies and procedures.
Monitor the Risks
Once you put measures related to risk management in its place, you have to check whether they are working properly or not. This means you have to identify or monitor your business regularly and should deal with potential risks.
Recommended Project Management Software
If you’re interested in learning more about top rated project management software, the editors at Project-Management.com actively recommend the following:
monday.com Work OS is the project management software that helps you and your team plan, execute, and track projects and workflows in one collaborative space. Manage everything from simple to complex projects more efficiently with the help of visual boards, 200+ ready-made templates, clever no-code automations, and easy integrations. In addition, custom dashboards simplify reporting, so you can evaluate your progress and make data-driven decisions.
ClickUp is one of the highest-rated project management tools today. Use Docs, Reminders, Goals, Calendars, Chat, scheduling, assigned comments, custom views, & more with this all-in-one project management tool.
Used by 800,000+ teams in companies like Airbnb, Google, and Uber, it brings all of your projects into a single app! Built for teams of all sizes and industries, Our fully customizable & proprietary features make it a must-have for anyone wanting to keep project management in one place.