Everything in life has a potential risk associated with it. The International Standards Organization (ISO) defines risk as “the effect of uncertainty on objectives (whether positive or negative).”
Effective risk management can be divided into four basic steps:
- Identifying risks
- Analyzing risks
- Managing or mitigating risks
- Monitoring risks
Some of the questions to consider are:
- Who may be causing the risk?
- What are the likely consequences of the risk for now and the future?
- When will the risk be a factor?
- Where is the risk most likely to occur?
- Why does the risk affect my business?
- How do I minimize the risk?
Next Week: Understanding Risk vs. Reward, Penalties vs. Profit.