presentation on risk management process

Risk Management 101: Process, Examples, Strategies

Emily Villanueva

August 16, 2023

Effective risk management takes a proactive and preventative stance to risk, aiming to identify and then determine the appropriate response to the business and facilitate better decision-making. Many approaches to risk management focus on risk reduction, but it’s important to remember that risk management practices can also be applied to opportunities, assisting the organization with determining if that possibility is right for it.

Risk management as a discipline has evolved to the point that there are now common subsets and branches of risk management programs, from enterprise risk management (ERM) , to cybersecurity risk management, to operational risk management (ORM) , to  supply chain risk management (SCRM) . With this evolution, standards organizations around the world, like the US’s National Institute of Standards and Technology (NIST) and the International Standards Organization (ISO) have developed and released their own best practice frameworks and guidance for businesses to apply to their risk management plan.

Companies that adopt and continuously improve their risk management programs can reap the benefits of improved decision-making, a higher probability of reaching goals and business objectives, and an augmented security posture. But, with risks proliferating and the many types of risks that face businesses today, how can an organization establish and optimize its risk management processes? This article will walk you through the fundamentals of risk management and offer some thoughts on how you can apply it to your organization.

What Are Risks?

We’ve been talking about risk management and how it has evolved, but it’s important to clearly define the concept of risk. Simply put, risks are the things that could go wrong with a given initiative, function, process, project, and so on. There are potential risks everywhere — when you get out of bed, there’s a risk that you’ll stub your toe and fall over, potentially injuring yourself (and your pride). Traveling often involves taking on some risks, like the chance that your plane will be delayed or your car runs out of gas and leave you stranded. Nevertheless, we choose to take on those risks, and may benefit from doing so. 

Companies should think about risk in a similar way, not seeking simply to avoid risks, but to integrate risk considerations into day-to-day decision-making.

• What are the opportunities available to us?
• What could be gained from those opportunities?
• What is the business’s risk tolerance or risk appetite – that is, how much risk is the company willing to take on?
• How will this relate to or affect the organization’s goals and objectives?
• Are these opportunities aligned with business goals and objectives?

With that in mind, conversations about risks can progress by asking, “What could go wrong?” or “What if?” Within the business environment, identifying risks starts with key stakeholders and management, who first define the organization’s objectives. Then, with a risk management program in place, those objectives can be scrutinized for the risks associated with achieving them. Although many organizations focus their risk analysis around financial risks and risks that can affect a business’s bottom line, there are many types of risks that can affect an organization’s operations, reputation, or other areas.

Remember that risks are hypotheticals — they haven’t occurred or been “realized” yet. When we talk about the impact of risks, we’re always discussing the potential impact. Once a risk has been realized, it usually turns into an incident, problem, or issue that the company must address through their contingency plans and policies. Therefore, many risk management activities focus on risk avoidance, risk mitigation, or risk prevention.

What Different Types of Risks Are There?

There’s a vast landscape of potential risks that face modern organizations. Targeted risk management practices like ORM and SCRM have risen to address emerging areas of risk, with those disciplines focused on mitigating risks associated with operations and the supply chain. Specific risk management strategies designed to address new risks and existing risks have emerged from these facets of risk management, providing organizations and risk professionals with action plans and contingency plans tailored to unique problems and issues.

Common types of risks include: strategic, compliance, financial, operational, reputational, security, and quality risks.

Strategic Risk

Strategic risks are those risks that could have a potential impact on a company’s strategic objectives, business plan, and/or strategy. Adjustments to business objectives and strategy have a trickle-down effect to almost every function in the organization. Some events that could cause strategic risks to be realized are: major technological changes in the company, like switching to a new tech stack; large layoffs or reductions-in-force (RIFs); changes in leadership; competitive pressure; and legal changes.

Compliance Risk

Compliance risks materialize from regulatory and compliance requirements that businesses are subject to, like Sarbanes-Oxley for publicly-traded US companies, or GDPR for companies that handle personal information from the EU. The consequence or impact of noncompliance is generally a fine from the governing body of that regulation. These types of risks are realized when the organization does not maintain compliance with regulatory requirements, whether those requirements are environmental, financial, security-specific, or related to labor and civil laws.

Financial Risk

Financial risks are fairly self-explanatory — they have the possibility of affecting an organization’s profits. These types of risks often receive significant attention due to the potential impact on a company’s bottom line. Financial risks can be realized in many circumstances, like performing a financial transaction, compiling financial statements, developing new partnerships, or making new deals.

Operational Risk

Risks to operations, or operational risks, have the potential to disrupt daily operations involved with running a business. Needless to say, this can be a problematic scenario for organizations with employees unable to do their jobs, and with product delivery possibly delayed. Operational risks can materialize from internal or external sources — employee conduct, retention, technology failures, natural disasters, supply chain breakdowns — and many more.

Reputational Risk

Reputational risks are an interesting category. These risks look at a company’s standing in the public and in the media and identify what could impact its reputation. The advent of social media changed the reputation game quite a bit, giving consumers direct access to brands and businesses. Consumers and investors too are becoming more conscious about the companies they do business with and their impact on the environment, society, and civil rights. Reputational risks are realized when a company receives bad press or experiences a successful cyber attack or security breach; or any situation that causes the public to lose trust in an organization.

Security Risk

Security risks have to do with possible threats to your organization’s physical premises, as well as information systems security. Security breaches, data leaks, and other successful types of cyber attacks threaten the majority of businesses operating today. Security risks have become an area of risk that companies can’t ignore, and must safeguard against.

Quality Risk

Quality risks are specifically associated with the products or services that a company provides. Producing low-quality goods or services can cause an organization to lose customers, ultimately affecting revenue. These risks are realized when product quality drops for any reason — whether that’s technology changes, outages, employee errors, or supply chain disruptions.

Steps in the Risk Management Process

The six risk management process steps that we’ve outlined below will give you and your organization a starting point to implement or improve your risk management practices. In order, the risk management steps are: 

• Risk identification
• Risk analysis or assessment
• Controls implementation
• Resource and budget allocation
• Risk mitigation
• Risk monitoring, reviewing, and reporting

If this is your organization’s first time setting up a risk management program, consider having a formal risk assessment completed by an experienced third party, with the goal of producing a risk register and prioritized recommendations on what activities to focus on first. Annual (or more frequent) risk assessments are usually required when pursuing compliance and security certifications, making them a valuable investment.

Step 1: Risk Identification

The first step in the risk management process is risk identification. This step takes into account the organization’s overarching goals and objectives, ideally through conversations with management and leadership. Identifying risks to company goals involves asking, “What could go wrong?” with the plans and activities aimed at meeting those goals. As an organization moves from macro-level risks to more specific function and process-related risks, risk teams should collaborate with critical stakeholders and process owners, gaining their insight into the risks that they foresee.

As risks are identified, they should be captured in formal documentation — most organizations do this through a risk register, which is a database of risks, risk owners, mitigation plans, and risk scores.

Step 2: Risk Analysis or Assessment

Analyzing risks, or assessing risks, involves looking at the likelihood that a risk will be realized, and the potential impact that risk would have on the organization if that risk were realized. By quantifying these on a three- or five-point scale, risk prioritization becomes simpler. Multiplying the risk’s likelihood score with the risk’s impact score generates the risk’s overall risk score. This value can then be compared to other risks for prioritization purposes.

The likelihood that a risk will be realized asks the risk assessor to consider how probable it would be for a risk to actually occur. Lower scores indicate less chances that the risk will materialize. Higher scores indicate more chances that the risk will occur.

Likelihood, on a 5×5 risk matrix, is broken out into:

• Highly Unlikely
• Highly Likely

The potential impact of a risk, should it be realized, asks the risk assessor to consider how the business would be affected if that risk occurred. Lower scores signal less impact to the organization, while higher scores indicate more significant impacts to the company.

Impact, on a 5×5 risk matrix, is broken out into:

• Negligible Impact
• Moderate Impact
• High Impact
• Catastrophic Impact

Risk assessment matrices help visualize the relationship between likelihood and impact, serving as a valuable tool in risk professionals’ arsenals.

Organizations can choose whether to employ a 5×5 risk matrix, as shown above, or a 3×3 risk matrix, which breaks likelihood, impact, and aggregate risk scores into low, moderate, and high categories.

Step 3: Controls Assessment and Implementation

Once risks have been identified and analyzed, controls that address or partially address those risks should be mapped. Any risks that don’t have associated controls, or that have controls that are inadequate to mitigate the risk, should have controls designed and implemented to do so.

Step 4: Resource and Budget Allocation

This step, the resource and budget allocation step, doesn’t get included in a lot of content about risk management. However, many businesses find themselves in a position where they have limited resources and funds to dedicate to risk management and remediation. Developing and implementing new controls and control processes is timely and costly; there’s usually a learning curve for employees to get used to changes in their workflow.

Using the risk register and corresponding risk scores, management can more easily allocate resources and budget to priority areas, with cost-effectiveness in mind. Each year, leadership should re-evaluate their resource allocation as part of annual risk lifecycle practices.

Step 5: Risk Mitigation

The risk mitigation step of risk management involves both coming up with the action plan for handling open risks, and then executing on that action plan. Mitigating risks successfully takes buy-in from various stakeholders. Due to the various types of risks that exist, each action plan may look vastly different between risks. 

For example, vulnerabilities present in information systems pose a risk to data security and could result in a data breach. The action plan for mitigating this risk might involve automatically installing security patches for IT systems as soon as they are released and approved by the IT infrastructure manager. Another identified risk could be the possibility of cyber attacks resulting in data exfiltration or a security breach. The organization might decide that establishing security controls is not enough to mitigate that threat, and thus contract with an insurance company to cover off on cyber incidents. Two related security risks; two very different mitigation strategies. 

One more note on risk mitigation — there are four generally accepted “treatment” strategies for risks. These four treatments are:

• Risk Acceptance: Risk thresholds are within acceptable tolerance, and the organization chooses to accept this risk.
• Risk Transfer : The organization chooses to transfer the risk or part of the risk to a third party provider or insurance company.
• Risk Avoidance : The organization chooses not to move forward with that risk and avoids incurring it.
• Risk Mitigation : The organization establishes an action plan for reducing or limiting risk to acceptable levels.

If an organization is not opting to mitigate a risk, and instead chooses to accept, transfer, or avoid the risk, these details should still be captured in the risk register, as they may need to be revisited in future risk management cycles.

Step 6: Risk Monitoring, Reviewing, and Reporting

The last step in the risk management lifecycle is monitoring risks, reviewing the organization’s risk posture, and reporting on risk management activities. Risks should be monitored on a regular basis to detect any changes to risk scoring, mitigation plans, or owners. Regular risk assessments can help organizations continue to monitor their risk posture. Having a risk committee or similar committee meet on a regular basis, such as quarterly, integrates risk management activities into scheduled operations, and ensures that risks undergo continuous monitoring. These committee meetings also provide a mechanism for reporting risk management matters to senior management and the board, as well as affected stakeholders.

As an organization reviews and monitors its risks and mitigation efforts, it should apply any lessons learned and use past experiences to improve future risk management plans.

Examples of Risk Management Strategies

Depending on your company’s industry, the types of risks it faces, and its objectives, you may need to employ many different risk management strategies to adequately handle the possibilities that your organization encounters. 

Some examples of risk management strategies include leveraging existing frameworks and best practices, minimum viable product (MVP) development, contingency planning, root cause analysis and lessons learned, built-in buffers, risk-reward analysis, and third-party risk assessments.

Leverage Existing Frameworks and Best Practices

Risk management professionals need not go it alone. There are several standards organizations and committees that have developed risk management frameworks, guidance, and approaches that business teams can leverage and adapt for their own company. 

Some of the more popular risk management frameworks out there include:

• ISO 31000 Family : The International Standards Organization’s guidance on risk management.
• NIST Risk Management Framework (RMF) : The National Institute of Standards and Technology has released risk management guidance compatible with their Cybersecurity Framework (CSF).
• COSO Enterprise Risk Management (ERM) : The Committee of Sponsoring Organizations’ enterprise risk management guidance.

Minimum Viable Product (MVP) Development

This approach to product development involves developing core features and delivering those to the customer, then assessing response and adjusting development accordingly. Taking an MVP path reduces the likelihood of financial and project risks, like excessive spend or project delays by simplifying the product and decreasing development time.

Contingency Planning

Developing contingency plans for significant incidents and disaster events are a great way for businesses to prepare for worst-case scenarios. These plans should account for response and recovery. Contingency plans specific to physical sites or systems help mitigate the risk of employee injury and outages.

Root Cause Analysis and Lessons Learned

Sometimes, experience is the best teacher. When an incident occurs or a risk is realized, risk management processes should include some kind of root cause analysis that provides insights into what can be done better next time. These lessons learned, integrated with risk management practices, can streamline and optimize response to similar risks or incidents.

Built-In Buffers

Applicable to discrete projects, building in buffers in the form of time, resources, and funds can be another viable strategy to mitigate risks. As you may know, projects can get derailed very easily, going out of scope, over budget, or past the timeline. Whether a project team can successfully navigate project risks spells the success or failure of the project. By building in some buffers, project teams can set expectations appropriately and account for the possibility that project risks may come to fruition.

Risk-Reward Analysis

In a risk-reward analysis, companies and project teams weigh the possibility of something going wrong with the potential benefits of an opportunity or initiative. This analysis can be done by looking at historical data, doing research about the opportunity, and drawing on lessons learned. Sometimes the risk of an initiative outweighs the reward; sometimes the potential reward outweighs the risk. At other times, it’s unclear whether the risk is worth the potential reward or not. Still, a simple risk-reward analysis can keep organizations from bad investments and bad deals.

Third-Party Risk Assessments

Another strategy teams can employ as part of their risk management plan is to conduct periodic third-party risk assessments. In this method, a company would contract with a third party experienced in conducting risk assessments, and have them perform one (or more) for the organization. Third-party risk assessments can be immensely helpful for the new risk management team or for a mature risk management team that wants a new perspective on their program. 

Generally, third-party risk assessments result in a report of risks, findings, and recommendations. In some cases, a third-party provider may also be able to help draft or provide input into your risk register. As external resources, third-party risk assessors can bring their experience and opinions to your organization, leading to insights and discoveries that may not have been found without an independent set of eyes.

Components of an Effective Risk Management Plan

An effective risk management plan has buy-in from leadership and key stakeholders; applies the risk management steps; has good documentation; and is actionable. Buy-in from management often determines whether a risk management function is successful or not, since risk management requires resources to conduct risk assessments, risk identification, risk mitigation, and so on. Without leadership buy-in, risk management teams may end up just going through the motions without the ability to make an impact. Risk management plans should be integrated into organizational strategy, and without stakeholder buy-in, that typically does not happen. 

Applying the risk management methodology is another key component of an effective plan. That means following the six steps outlined above should be incorporated into a company’s risk management lifecycle. Identifying and analyzing risks, establishing controls, allocating resources, conducting mitigation, and monitoring and reporting on findings form the foundations of good risk management. 

Good documentation is another cornerstone of effective risk management. Without a risk register recording all of a company’s identified risks and accompanying scores and mitigation strategies, there would be little for a risk team to act on. Maintaining and updating the risk register should be a priority for the risk team — risk management software can help here, providing users with a dashboard and collaboration mechanism.

Last but not least, an effective risk management plan needs to be actionable. Any activities that need to be completed for mitigating risks or establishing controls, should be feasible for the organization and allocated resources. An organization can come up with the best possible, best practice risk management plan, but find it completely unactionable because they don’t have the capabilities, technology, funds, and/or personnel to do so. It’s all well and good to recommend that cybersecurity risks be mitigated by setting up a 24/7 continuous monitoring Security Operations Center (SOC), but if your company only has one IT person on staff, that may not be a feasible action plan.

Executing on an effective risk management plan necessitates having the right people, processes, and technology in place. Sometimes the challenges involved with running a good risk management program are mundane — such as disconnects in communication, poor version control, and multiple risk registers floating around. Risk management software can provide your organization with a unified view of the company’s risks, a repository for storing and updating key documentation like a risk register, and a space to collaborate virtually with colleagues to check on risk mitigation efforts or coordinate on risk assessments. Get started building your ideal risk management plan today!

Emily Villanueva, MBA, is a Senior Manager of Product Solutions at AuditBoard. Emily joined AuditBoard from Grant Thornton, where she provided consulting services specializing in SOX compliance, internal audit, and risk management. She also spent 5 years in the insurance industry specializing in SOX/ICFR, internal audits, and operational compliance. Connect with Emily on LinkedIn .

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How to Make Risk Management Presentations Engaging and Actionable Across Your Organization

Life is full of risk. We face risks from the moment we wake up in the morning until we fall asleep at night. Will the alarm fail to sound? Will I get into a car accident on my way to work? Will I catch a virus when I go to dinner? Heck, there’s a risk— no matter how small— that we will die in our sleep during each night.

Risk is simply an inherent element of everything we do, and business is no exception. Will a vital employee quit, or will there be a labor shortage? What will happen in the stock market, and how will it impact the economy? What if there is an accident or a lawsuit involving the company? What happens if a new product fails? What actions will be taken in the event of a security breach or equipment failure?

We might not be able to prevent risk, but we can manage it. Managing business risk requires identifying and understanding risks while seeking ways to reduce risk in a way that also supports other business goals.

Companies heavily invest every year in ways to mitigate and respond to risk. But how do they make sure everyone is on board? 

There might be a variety of ways to communicate a risk management plan to all the relevant players, but a visual presentation can be effective in not only presenting the risk management plan, but also ensuring that it is engaging and actionable across your organization.

What to include when you prepare a risk management plan:

A written risk management plan for business should not only include a listing of possible risks, but it also should feature plans to manage risk and respond to incidents.

• Identify risks

Risk management refers to a variety of business aspects, both internal weaknesses, and external threats. Like much in life, knowing is half the battle, and therefore identifying risks is key in addressing them. 

Risk management should be considered before embarking on any new task or project, and everyone connected to a business should be encouraged to identify additional risks. Not only should the risk itself be considered, but companies also should identify possible consequences to better prepare to address each one.

• Minimize risks

A variety of strategies are available to manage and minimize risks once they are identified. One popular method of mitigating risk involves the 4Ts:

• Transfer risk by assigning a responsible team or party to each identified risk.
• Tolerate risk by monitoring it before taking further action.
• Treat risk by taking actions that reduce the likelihood that it will occur.
• Terminate risk by adopting or amending processes that eliminate it.
• Assign roles

Staff members should be assigned to each potential risk or risk category. These individuals will be responsible for mitigating their assigned risks, as well as reporting and responding to applicable incidents. A list of these roles should be included in the risk management plan.

• Plan recovery

Each risk included in the management plan must be followed by a strategy for preventing and addressing issues. An effective risk management plan will include a compilation of business projects, the risk applicable to each and an operational plan to respond and recover from incidents. Part of that plan also should include updating mitigation efforts following an incident to prevent it from repeating.

• Communicate plan

A risk management plan can’t be effective unless everyone within a company is on board. In addition to presenting the plan to principle players, be sure that it is also published somewhere that the full risk management plan can be accessed and understood by anyone within the company at any time.

• Rinse and repeat

The most effective risk management plans are living documents, continually updated with new or changed risks and new strategies to address them. Each risk outlined in the plan should be periodically reevaluated and new risks identified. The plan also should be monitored along with staff turnover to ensure no tasks fall through the cracks.

Tips to make risk management presentations engaging and actionable across your organization:

Audience engagement is vital to a successful risk management training presentation. After all, if staff and executives are asleep they will hardly become familiar with the plan and their assigned roles.

• Include visual assets

About 90 percent of human thought is visually-based. Therefore, it’s no shocker that including visual assets within a presentation is one of the most effective strategies for engaging all types of audiences . 

Releasing the risk management plan through a visual presentation is a great start, but the content within the slide deck is just as important. After all, the average PowerPoint slide includes 40 words , which is entirely too many. Instead, include more images, videos and animations within a financial risk management presentation or any other risk management training presentations.

• Illustrate data

Data is one of the most convincing sorts of content that can be presented to an audience. As anyone can attest— at least in most cases— numbers don’t lie. In fact, they can tell their own stories. A crowded slide full of stats and figures is a quick way to send your audience off to Dreamland. 

Instead, illustrate your data through infographics. Beautiful.ai offers a host of various infographics through our smart slide templates. Just input your data and watch our artificial intelligence-powered presentation software design the infographic accordingly. Choose from infographics like scattergraphs , process diagrams , pie charts and bar graphs to tell the story of different risks and strategies to address them.

• Tell a story

According to the 2018 State of Attention survey, almost 90 percent of respondents said a strong narrative or story backing a presentation is critical in maintaining audience engagement. Sure, facts and data can persuade audiences and get them on board, but only if people are paying attention. 

Stories have kept audiences engaged since before recorded history. Tell the story of your risk management plan by including real-life examples or by creating a character for hypothetical scenarios. Those unsure how to incorporate a story into the structure of their presentation can look to Beautiful.ai’s various presentation templates for inspiration.

• Include your audience

If you really want to keep your audience engaged with your risk management presentation slides, be sure you talk with people, not at them. Include your audience in your presentation by asking questions, taking surveys or presenting group activities. Of course, the first step is identifying who makes up that audience. You won’t necessarily present the same content to an executive board as to a room full of new hires.

One effective way to engage an audience with a risk management plan presentation from the very start is through a pre-presentation quiz or survey that gauges how much participants already know about risk management, like this example from the U.S. Small Business Association. Not only will the activity engage the audience, but it will alert participants to what they don’t know from the very start. Other engagement tools include Q&A sessions, humor and gamification.

As mentioned, the average PowerPoint slide consists of 40 words… way too many to keep audiences engaged. Remember, your presentation should be based on an outline of your plan, not a verbatim recitation of it. 

Not only are uncluttered slides more effective, but shorter presentations also are more effective than longer ones, based on both audience attention and respect for time. Especially when delivering a risk management board presentation, it’s vital to respect your audience’s time. Beautiful.ai’s library of presentation templates can serve as a guideline to effective presentation lengths for a variety of topics.

Samantha Pratt Lile

Samantha is an independent journalist, editor, blogger and content manager. Examples of her published work can be found at sites including the Huffington Post, Thrive Global, and Buzzfeed.

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Home Blog Business Risk Management Techniques

Risk Management Techniques

Risk and business cannot be separated! For an entrepreneur, the possibility of a loss is as real as the possibility of profitability; what lies in between the two is risk. In simple terms, the risk is the possibility of loss for a business, with financial implications. There are risks that are avoidable and risks that need to be better managed to reduce the likelihood of negative consequences.

Basic Elements of Risk Management

Risk management is the identification, assessment, and controlling of risks. Businesses around the world plan and spend a significant amount of money in managing risks. However, risk management has implications beyond business. Risk management is applicable for businesses and disaster management and can even be used by an individual at the  household level . The latter can be a form of financial management, retirement-related risks, and identification of financial shocks that can affect a household.

Risk management broadly has five basic elements, covering the structure of how it can be incorporated for anticipating and controlling risks.

1. Identify Threats

In order to anticipate and manage risks, one must first identify what might be deemed as a risk. For a business, it can include the possibility of financial loss, an injury to an employee, the possibility of a lawsuit, accidents affecting customers, etc. These risks can arise due to a number of factors, be it economic conditions of a country, competition from competitors, lack of safety measures at the workplace for employees, faulty products, and the like.

2. Assess Vulnerability of Critical Assets

The next step includes an evaluation and assessment of risks. This is to identify the vulnerability of critical assets due to the risk. For example, if there is a production process that can lead to an employee’s injury or death, there seems to be a high probability of such an accident occurring. Such a process needs to be changed or replaced.

3. Determine the Threat the Risk Poses

Different risks can pose different types of threats. An injury caused due to a hazardous production process can lead to a lawsuit by the employee, cause reputation damage, and might even lead to a decline in sales due to bad reputation.

4. Reducing Risks

There are several ways that businesses can reduce risks. If a production process has the potential to cause harm, it might be worth revising how the process is carried out or finding alternative methods for performing certain tasks to make the process safe. There might even be a need for safety equipment or machinery and regular equipment inspection and maintenance that can help manage such a risk in a better way by reducing the probability of an accident. Some risks however can be hard to reduce. This might include accounting for an economic meltdown, economic policy changes due to a change of government in a country, or viz majors like the COVID-19 pandemic or an unforeseen natural disaster.

5. Risk Reduction Measures

Risks can be categorized, (e.g., low, medium, or high). It isn’t necessary for a business to try to manage all types of risks, since the possibility of some risks might be negligible, and committing resources for them might be very expensive. Risk reduction is a process that cannot be viewed in isolation. Organizations need to perpetually monitor risks and account for course correction if and when necessary.

Managing Different Types of Risks

Risk management entails various types of strategies, such as risk reduction, risk avoidance, risk sharing, and risk retaining. We covered these strategies in detail in our previous post about risk management and risk assessment . In the section below, we will provide you with examples of different types of risks a business might face and what can be a few ways of managing such risks.

Market Risk

When it comes to imagining risks, investors usually consider the term synonymous with market risk. Market risk is the possibility of investors losing money due to a decrease in the value of their investment. The most common strategy for investors to manage market risk is by diversifying investment portfolios to avoid tying too many assets in a single business entity. Furthermore, buying at various intervals and investing in less correlated investments, such as real estate, bonds, and other commodities can be another method to avoid market risks.

Inflation Risk

Inflation can affect a business in a number of ways. The cost of inputs can suddenly rise, whereas a business engaged in export of goods can find the real value of the currency decline, leading to a loss in selling goods at a previously agreed rate. Similarly, an increase in the price of imports due to a shift in exchange rate can adversely affect the price the business can charge for its products in the local market.

There are a number of ways businesses can manage inflation-related risks, such as by localization of production parts to avoid exchange rate volatility and owing ancillary firms. Likewise, an investor might choose to invest in assets that can offer a real rate of return above inflation. This might include real estate, mineral resources, or government-issued bonds.

Liquidity Risk

You might come across a house that you intend to buy to sell later on. The location of the house might be in an area that has good market value and is likely to increase in the near future. However, how long might it take you to sell the house? Is the property too expensive for an average buyer? Will your assets get tied up for too long after purchasing the property? This is an example of how a liquidity risk can occur. Businesses can end up with assets that are tied up for too long, leading to the risk of owning assets that can be hard to cash out.

A liquidity risk can be avoided by avoiding the purchase of assets that might be difficult to cash out. Some businesses might avoid giving products on credit to local retailers or selling raw material at deferred payments to avoid a liquidity risk.

Longevity Risk

As people receive better healthcare and lifestyles, it is expected that they might live longer. While this is good news, the increase in the lifespan of such individuals means that pensions and policyholders will live longer, leading to a higher payout ratio. Longevity risk is viewed differently by different individuals. For a business, a long lifespan of policyholders or pensioners will lead to an increase in the amount of money they need to pay. Whereas people receiving such benefits will be able to live longer with the assurance of the benefits they have worked hard for.

Many organizations, be it profitable businesses or government-run organizations operating on a loss for several years, have different coping mechanisms for such a risk. Many organizations now hire employees on a contractual basis, whereas pensioners in some cases might be paid out an amount after a ‘plan termination’ by the employer. Some countries might also look to encourage people to work longer and delay social security to rationalize pension plans.

Opportunity Risk

Let’s assume you have a large sum of money placed safely in a safe at home. While the money might appear secure, it might lose value over time due to inflation. You might also run the risk of missing out on a profitable opportunity because you failed to invest in the venture. Businesses can be risk-averse , leading to a competitor taking more of the market share by investing in R&D to improve their product.

An opportunity risk, therefore, requires careful consideration. Businesses might choose to keep a sum for cost overruns, emergency needs or to avoid losing money tied up in assets hard to liquidate while investing the rest to avoid an opportunity risk.

For any business, taxes, especially an increase in them, can lead to a reduction in profitability and loss of sales due to higher prices for their commodities. There’s also the issue of sales tax compliance as the company expands to new states or countries. For an investor, it is essential to determine which portfolio to invest in, considering the rate of tax applicable in relation to the anticipated rate of return. Some investors might opt for tax-deferred accounts to cope with tax risks, whereas businesses might try to reduce tac risks by investing in offers by the government in products which are less heavily taxed.

Many countries are offering fewer taxes on electric cars to help improve the air quality of cities and reduce the negative implications of cars running on petroleum-based products. Some countries have even announced a ban on petrol and diesel-based vehicles by 2035 .

Sequence of Returns Risk

An investor might invest in a portfolio or venture that gives it a return of 5% one year and a loss of 5% the following year. To avoid negative portfolio returns, investors might spend conservatively and account for spending flexibility. An investor might also avoid selling stocks on a loss and use a reserve to fund for a buffer stock to avoid short-term losses due to a sale of stocks at a loss when the chips are down. To have smart investment strategies,  start using an all-in-one investment app , which allows you to prevent risks.

Using Different Techniques for Identifying and Presenting Risks

There are a number of techniques that businesses use to identify risks. If you need to create a PowerPoint presentation about risk management, you can use a number of handy templates and techniques listed below.

Risk Matrix

A risk matrix is used during the process of assessing risks to categorize them and determine the possibility of the occurrence of the risks. The matrix can be a very handy mechanism for visually identifying high-priority risks for important management decisions.

RAIDAR Model

RAIDAR model is a risk management model used to assess risks, assumptions, issues, dependencies, action, and repairs. The model can be useful for assessing project risks and for their effective management.

PEST or PESTEL Analysis

A PEST analysis looks at the political-economic, social and technological environment for macro-environmental factors. The analysis is often extended to also include environmental and legal factors, extending the term PEST to PESTEL. This strategic management component is used for the scanning for the aforementioned factors to determine the potential for market growth, decline, and the direction that the business needs to take.

SWOT Analysis

A SWOT Analysis is a famous strategic planning technique used for identifying strengths, weaknesses, opportunities, and threats. Be it a competitor, economic uncertainty, natural disasters, market volatility, or the potential of an opportunity risk, a SWOT analysis can be a handy tool to use in identifying and mitigating risks.

Decision Tree

A decision tree is used to support decisions by placing options and anticipating possible consequences in a tree-like structure. A decision tree can be used by businesses to assess chance events, resource costs, risks, and payoffs.

Final Words

There are risks that a business can account for and manage and risks that remain perpetual. Risks that might be associated with the national economy, a natural disaster, or sudden change in government policy can be hard to account for and need constant monitoring. This is different from risks that can be managed by changing a hazardous production process to a safer alternative or diversification of portfolio to avoid losses.

Risk management is a practice that businesses would ideally do away with if it were ever possible. As distasteful as it might be, it is impossible to avoid anticipating risks for business continuity and managing them, even if it comes with a burden of heavy costs that are sometimes unavoidable.

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5 steps to any effective risk management process

Reading time: about 5 min

Steps of the risk management process

• Identify the risk
• Analyze the risk
• Prioritize the risk
• Treat the risk
• Monitor the risk

While your organization can’t entirely avoid risk, you can anticipate and mitigate risks through an established risk management procedure. Follow this risk management framework to beat the odds and streamline your team for success, making the team more agile and responsive when risks do arise.

What is the risk management process?

It's simply that: an ongoing process of identifying, treating, and then managing risks. Taking the time to set up and implement a risk management process is like setting up a fire alarm––you hope it never goes off, but you’re willing to deal with the minor inconvenience upfront in exchange for protection down the road. 

Identifying and tracking risks that might arise in a project offers significant benefits, including:

• More efficient resource planning by making previously unforeseen costs visible
• Better tracking of project costs and more accurate estimates of return on investment
• Increased awareness of legal requirements
• Better prevention of physical injuries and illnesses
• Flexibility, rather than panic, when changes or challenges do arise

Risk management steps

Follow these risk management steps to improve your process of risk management.

1. Identify the risk

Anticipating possible pitfalls of a project doesn't have to feel like gloom and doom for your organization–quite the opposite. Identifying risks is a positive experience that your whole team can take part in and learn from. Project risks are anything that might impact the project’s schedule, budget, or success.

Leverage the collective knowledge and experience of your entire team. Ask everyone to identify risks they've either experienced before or may have additional insight about. This process fosters communication and encourages cross-functional learning.

Use a risk breakdown structure to list out potential risks in a project and organize them according to level of detail, with the most high-level risks at the top and more granular risks at the bottom. This visual risk management strategy will help you and your team anticipate where risks might emerge when creating tasks for a project.

Once you and your team have compiled possible issues, create a project risk log for clear, concise tracking and monitoring of risks throughout a project.

A project risk log, also referred to as a project risk register , is an integral part of any effective risk management process. As an ongoing database of each project’s potential risks, it not only helps you manage current risks but serves as a reference point on past projects as well. By outlining your risk register with the proper data points, you and your team can quickly and correctly identify and assess possible threats to any project.

2. Analyze the risk

Once your team identifies possible problems, it's time to dig a little deeper. How likely are these risks to occur? And if they do occur, what will the ramifications be? How will you respond?

During this step, your team will estimate the probability and fallout of each risk to decide where to focus first. Then you will determine a response plan for each risk. Factors such as potential financial loss to the organization, time lost, and severity of impact all play a part in accurately analyzing each risk. By putting each risk under the microscope, you’ll also uncover any common issues across a project and further refine the risk management process for future projects.

Ready to improve your systems and reduce failures through FMEA risk analysis?

3. Prioritize the risk

Now prioritization begins. Rank each risk by factoring in both its likelihood of happening and its potential effect on the project.

This step gives you a holistic view of the project at hand and pinpoints where the team's focus should lie. Most importantly, it’ll help you identify workable solutions for each risk. This way, the risk management workflow itself is not interrupted or delayed in significant ways during the treatment stage.

4. Treat the risk

Once the worst risks come to light, dispatch your treatment plan. While you can’t anticipate every risk, the previous steps of your risk management process should have you set up for success. Starting with the highest priority risk first, task your team with either solving or at least mitigating the risk so that it’s no longer a threat to the project.

Effectively treating and mitigating the risk also means using your team's resources efficiently without derailing the project in the meantime. As time goes on and you build a larger database of past projects and their risk logs, you can anticipate possible risks for a more proactive rather than reactive approach for more effective treatment.

5. Monitor the risk

Clear communication among your team and stakeholders is essential when it comes to ongoing monitoring of potential threats. Send regular project updates to the team and other stakeholders. Check in with your risk managers individually to ensure there aren’t any red flags popping up throughout the project.

Be sure to actively maintain the risk register—it should be a living document that you and your team refer to often. As risks change or evolve, those should be updated in the log for everyone to see. That way, everyone can stay on the same page and respond to risks faster and more proactively.   While it may feel like you're herding cats sometimes, with your risk management plan and its corresponding project risk register in place, keeping tabs on those moving targets becomes anything but risky business.

Be better prepared and implement a complete risk management strategy.

About Lucidchart

Lucidchart, a cloud-based intelligent diagramming application, is a core component of Lucid Software's Visual Collaboration Suite. This intuitive, cloud-based solution empowers teams to collaborate in real-time to build flowcharts, mockups, UML diagrams, customer journey maps, and more. Lucidchart propels teams forward to build the future faster. Lucid is proud to serve top businesses around the world, including customers such as Google, GE, and NBC Universal, and 99% of the Fortune 500. Lucid partners with industry leaders, including Google, Atlassian, and Microsoft. Since its founding, Lucid has received numerous awards for its products, business, and workplace culture. For more information, visit lucidchart.com.

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Risk management process

Published by Gervase Terry Modified over 8 years ago

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Risk Management And Mitigation Strategy Powerpoint Presentation Slides

Enterprise risk management ERM is a technique that looks at risk management strategically from the entire firms perspective. It is a top-down strategy aiming to identify, assess and prepare for potential hazards and damages that might interfere with an organizations operations and key objectives and lead to losses. To help managers shape the enterprises overall risk positioning, our professionals at SlideTeam have curated this customizable Risk management and mitigation strategy template. This template showcases the challenges faced by firms due to the lack of proper operational, strategic, and financial risk management. Additionally, the PPT covers the types, benefits, strategies, and frameworks of operational, strategic, and financial risk management. It also covers the procedure of identifying, assessing, mitigating, and monitoring different types of organizational risks. It includes effective risk management and mitigation plans for various enterprise risks. Lastly, the presentation highlights the cost incurred in implementing enterprise risk management, the impact of ERM on the overall operational performance of the organization, and the reduction of potential hazards that may affect business operations negatively. Download our 100 percent editable and customizable risk management ppt to know more in detail.

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PowerPoint presentation slides

Deliver an informational PPT on various topics by using this Risk Management And Mitigation Strategy Powerpoint Presentation Slides. This deck focuses and implements best industry practices, thus providing a birds-eye view of the topic. Encompassed with sixty three slides, designed using high-quality visuals and graphics, this deck is a complete package to use and download. All the slides offered in this deck are subjective to innumerable alterations, thus making you a pro at delivering and educating. You can modify the color of the graphics, background, or anything else as per your needs and requirements. It suits every business vertical because of its adaptable layout.

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• Complete Decks , All Decks , General
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Content of this Powerpoint Presentation

Slide 1 : This slide introduces Risk Management and Mitigation Strategy. State your company name and begin. Slide 2 : This slide states Agenda of the presentation. Slide 3 : This slide shows Table of Content for the presentation. Slide 4 : This is another slide continuing Table of Content for the presentation. Slide 5 : This slide highlights title for topics that are to be covered next in the template. Slide 6 : This slide presents Introduction to enterprise risk management system. Slide 7 : This slide displays Enterprise risk planning and management procedure. Slide 8 : This slide represents Key elements of enterprise risk management. Slide 9 : This slide showcases Benefits of enterprise risk management experienced by organizations. Slide 10 : This slide highlights title for topics that are to be covered next in the template. Slide 11 : This slide shows Challenges faced by organization due to operational risks. Slide 12 : This is another slide continuing Challenges faced by organization due to operational risks. Slide 13 : This slide presents Challenges faced by organization due to strategic risks. Slide 14 : This slide displays Challenges faced by organization due to financial risks. Slide 15 : This slide represents Gap analysis representing current enterprise risk management scenario. Slide 16 : This slide highlights title for topics that are to be covered next in the template. Slide 17 : This slide showcases Five categories of operational risk management. Slide 18 : This slide shows Key benefits of operational risk management. Slide 19 : This slide presents Operational risk management and governance framework. Slide 20 : This slide displays Best practices to effectively manage operational risks. Slide 21 : This slide highlights title for topics that are to be covered next in the template. Slide 22 : This slide represents SWOT analysis to identify operational risks. Slide 23 : This slide showcases Operational risk management and assessment report. Slide 24 : This slide shows Operational risk mitigation and management plan. Slide 25 : This slide presents Operational risk monitoring and management plan. Slide 26 : This slide highlights title for topics that are to be covered next in the template. Slide 27 : This slide displays Various categories of enterprise strategic risks. Slide 28 : This slide represents Key benefits of strategic risk management. Slide 29 : This slide showcases Strategic risk management plan timeline. Slide 30 : This slide highlights title for topics that are to be covered next in the template. Slide 31 : This slide shows Competitive business strategy and objectives framework. Slide 32 : This slide presents Enterprise strategic risk identification and management register. Slide 33 : This slide displays Strategic risk assessment and management checklist. Slide 34 : This slide represents Generic strategic risk assessment framework. Slide 35 : This slide showcases Strategic risk assessment and management matrix. Slide 36 : This slide shows Strategic risk management and mitigation plan. Slide 37 : This slide highlights title for topics that are to be covered next in the template. Slide 38 : This slide presents Various types of enterprise financial risks. Slide 39 : This slide displays Effective techniques to manage financial risks. Slide 40 : This slide highlights title for topics that are to be covered next in the template. Slide 41 : This slide represents Analysis of balance sheet to identify potential financial risks. Slide 42 : This slide showcases Financial risk assessment and management register. Slide 43 : This slide shows Financial risk monitoring and mitigation plan. Slide 44 : This slide highlights title for topics that are to be covered next in the template. Slide 45 : This slide presents Enterprise risk management team structure. Slide 46 : This slide highlights title for topics that are to be covered next in the template. Slide 47 : This slide displays Impact of enterprise risk management on business operations. Slide 48 : This slide highlights title for topics that are to be covered next in the template. Slide 49 : This slide represents Cost incurred in enterprise risk management. Slide 50 : This slide highlights title for topics that are to be covered next in the template. Slide 51 : This slide showcases Operational risk management key metrics dashboard. Slide 52 : This slide shows Enterprise cyber risk management dashboard. Slide 53 : This slide presents Credit risk management KPI dashboard. Slide 54 : This slide contains all the icons used in this presentation. Slide 55 : This slide is titled as Additional Slides for moving forward. Slide 56 : This slide presents Bar chart with two products comparison. Slide 57 : This slide presents Roadmap with additional textboxes. Slide 58 : This slide provides 30 60 90 Days Plan with text boxes. Slide 59 : This is a Timeline slide. Show data related to time intervals here. Slide 60 : This slide shows Post It Notes. Post your important notes here. Slide 61 : This is a Financial slide. Show your finance related stuff here. Slide 62 : This is a Comparison slide to state comparison between commodities, entities etc. Slide 63 : This is a Thank You slide with address, contact numbers and email address.

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