The ISO defines Risk as being “The effect of uncertainty on an object!”
The “effect” would be any possible outcome that would deviate from the usual objective
We make plans based on various assumptions
We make plans nearly every day, for instance we are going to awake at six am to be ready to leave for work by eight am, leaving about forty minutes for travel time to work we should be there well before nine am because the average trip time to work in my own car, is only twenty minutes so you allow for another twenty incase of unusually heavy traffic.
In making plans we are making a prediction of the future. We are stating that by following a certain routine or pattern we will achieve our desired result or goal.
In this, we have made various assumptions as to how certain elements and factors that surround us will work and perform.
Sometimes assumptions can misfire, and our predictions can go awry by a near miss or completely off the rails.
Thus, any of the assumptions we had made that were wrong will bring about very different or varied outcomes some that could have a minor effect and others a drastic effect giving rise to various questions:
- What were our assumptions when we set about constructing the plan?
- What uncertainty arises about the value of our assumptions?
- To what degree does our uncertainty vary over those values?
- What is the potential effect of that uncertainty on the desired outcome?
- What can be done to cut down on the level of uncertainty?
Looking at the left for work scenario we would see that the following assumptions were made:
- My car has enough fuel in it
- My car is mechanically sound, and I am not expecting any trouble with it
- There should be no major traffic delays that would delay me beyond the average of twenty minutes
- There are no route detours or deviations for any reason
Now let’s identify the various risks with this scenario as should just one of these assumptions be wrong it could seriously impact and delay my journey:
- The car does not start for some reason thus causing a delay whilst I must call a mechanic
- The car either runs out of fuel or I must stop a petrol station which due to the time of the morning may be incredibly busy which would delay my journey.
- There is a major detour on the route to work due to roadworks or an accident. Never having takenthe allotted detour, I stand the risk of getting horribly lost which would cause a delay, or due to the amount of traffic being funneled through the detour it causes a major delay in my journey
Risk Assessment is a vital process for any company no matter how large or small. By establishing the various assumptions of the day-to-day operations and then evaluating the risks factors of those assumptions a company can create a valuable risk treatment and management process.