Unit 04: LO 4 - 4.3 - Risk Management

Think of it as organizing a team for a high school basketball game, where you need to make sure you're prepared for everything from who you're playing against to the condition of your equipment.

1. Identification

• Purpose: This is like scouting the other team before the big game. You're identifying potential risks that could affect your project or operation. By knowing the "players" on the field, you can develop strategies to win—or in this case, manage risks effectively. If you don't know what could go wrong, you can't prepare for it.

2. Probability

• Purpose: Once you've identified potential risks, the next step is to figure out how likely they are to happen. It's similar to studying the stats of each player on the opposing team. Some players might be really good shooters, while others are better at defense. Knowing the likelihood of each risk helps you to focus your effort on the ones that are more likely to occur.

3. Impact

• Purpose: Impact is about understanding the severity or consequences of each risk. If it does happen, how bad will it be? This is akin to understanding the importance of each player on the other team. A star player scoring against you will have a bigger impact than a benchwarmer, so you prepare your defense accordingly.

4. Prioritisation

• Purpose: After looking at the probability and impact of each risk, you have to decide which ones to focus on first. This is like deciding which players to guard closely during the game. If one risk is both likely to occur and would have a big impact, it's a high priority. By prioritizing, you're making sure you deal with the most important risks first.

5. Mitigation

• Purpose: Finally, you come up with strategies to lessen the risks you've prioritized. Think of it as creating plays and strategies to counter the strengths of the other team. This could mean setting up extra security measures, creating backup plans, or allocating resources differently.

So, much like preparing for a big basketball game, each stage of the risk management process helps you get ready for "game day" in your project or operation. You identify your challenges, evaluate their likelihood and impact, decide which ones to focus on, and then come up with a game plan to deal with them.