Risk Assessment
What is a Risk
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What is a Risk?
The joint Australian/New Zealand Standard defines risk as:
'the chance of something happening that will have an impact on objectives'
It is usual to view risk as any source of disruption that may act as a barrier to the achievement of key business objectives. However, even apparently beneficial risks (e.g. the sudden collapse of a major competitor) can result in significant disruption.
The discipline of risk assessment may sometimes result in the identification of useful changes to processes that bring ongoing benefits irrespective of any crisis implications.
Risk Context
The risks that a business may face include both internal and external.
External risks include;
- Physical - e.g., natural events such as earthquakes.
- Built environment - e.g., loss of utilities such as electricity.
- Socio-political - such as legislative changes, industrial action.
- Industrial and market environment - e.g., loss of a major supplier, competitive pressure or technology change.
Internal risks are viewed in the context of the operational elements that support your critical business objectives; i.e. those objectives that would sink the business if they are significantly impeded. They include:
- Financial - including working capital availability, fraud, etc.
- Supply - such as loss of an important agency
- People - e.g., loss of a key staff member to a competitor
- Technical - an important piece of equipment fails
Risk categories
Standard and Poors have summarised the categories of risk to a business enterprise to be generally as given in the following diagram.
However, your business will of course have its own specific areas of risk.
