Risk Management Process
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A Risk Management Process is a structured management process for mitigating risk events (that could potentially impact organizational objectives).
- Context:
- It can (typically) involve Risk Management Tasks, such as risk identification, risk assessment, risk mitigation, monitoring, and review to manage both internal and external risks.
- It can (typically) require collaboration across departments, including legal, finance, operations, and IT, to ensure comprehensive risk coverage.
- It can (often) be integrated into an organization's broader Governance, Risk Management, and Compliance (GRC) Process, ensuring that risk management aligns with governance and compliance efforts.
- It can (often) be supported by a Risk Management System.
- It can (often) utilize a variety of tools and frameworks, such as Risk Registers, Risk Matrices, and Risk Management Software, to systematically track and manage risks.
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- It can range from being a Simple Risk Management Process to being a Complex Risk Management Process, based on process complexity.
- It can range from being a Reactive Risk Management Process to being a Proactive Risk Management Process, based on timing approach.
- It can range from being a Qualitative Risk Management Process to being a Quantitative Risk Management Process, based on assessment method.
- It can range from being a Basic Risk Management Process to being a Comprehesnvive Risk Management Process, based on ....
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- It can be a part of Governance, Risk Management, and Compliance Process.
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- It can manifest through Risk Management Phases:
- Risk Identification Phases: discovering potential risk events
- Risk Analysis Phases: evaluating risk probability and risk impact
- Risk Response Phases: implementing risk control methods
- Risk Monitoring Phases: tracking risk status and control effectiveness
- It can incorporate Risk Representation Updates:
- Risk Signal Detection: identifying new risk signals
- Risk Pattern Recognition: analyzing risk patterns
- Risk Assessment Update: revising risk assessments
- Risk Control Update: modifying risk control methods
- It can utilize Risk Management Tools:
- Risk Register: documenting risk representation-items
- Risk Matrix: visualizing risk priority
- Risk Dashboard: monitoring risk status
- Risk Control Plan: documenting risk response strategys
- It can involve Risk Management Roles:
- Risk Owner: accountable for risk control
- Risk Assessor: performing risk analysis
- Risk Monitor: tracking risk status
- It can support Risk-Based Decision Making through:
- Risk-Adjusted Planning: incorporating risk considerations
- Risk-Based Prioritization: allocating resources
- Risk-Informed Strategy: developing response strategys
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- Example(s):
- Project Risk Management Processes that manage project risks through systematic risk identification, risk analysis, and risk response
- Financial Risk Management Processes that monitor market risks, credit risks, and liquidity risks through quantitative risk metrics
- Operational Risk Management Processes that handle process risks, people risks, and system risks through control frameworks
- Contract Risk Management Processes that address contract formation risks, contract performance risks, and contract compliance risks
- Technology Risk Management Processes that manage system risks, data risks, and cybersecurity risks
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- Counter-Example(s):
- Business Continuity Processes, which focuses on ensuring operations can continue during and after a disaster, rather than the identification and mitigation of risks before they occur.
- Quality Control Processes, which focuses on maintaining product or service standards, rather than identifying and mitigating risks across the organization.
- Ad Hoc Risk Responses without systematic processes
- Crisis Management Processes dealing with realized risks rather than potential risks
- Compliance Processes focused solely on regulatory requirements
- Problem Management Processes addressing current issues rather than future risks
- Change Management Processes managing planned changes rather than risk events
- See: Governance, Risk Management, and Compliance (GRC) Process, Risk Assessment, Enterprise Risk Management (ERM).