Risk identification is the process of analyzing and evaluating the work environment and the operation to identify occurrences that would harm the health of workers and/or the effectiveness of activities. This care helps prevent accidents, supports safety measures and protects the quality of the products/services offered.
Therefore, identifying risks is essential for the success of projects and even for the organization. Keep reading to understand risks and learn seven tips for identifying them efficiently.
See also: 12 steps to create a complete risk plan
What are the risks?
Risks are the possibility that an event or action will cause harm or negative consequences. In the corporate world, these damages can affect people, groups, property, products/services, or the environment.
They are inherent to business and precisely for this reason it is essential to have good risk management. This is decisive for success in achieving an organization’s goals.
After all, if you fail to identify a risk, you also miss an opportunity to avoid it; And these missed opportunities can turn into great losses.
Risks can come from a variety of sources, so getting an overview of them all can be difficult. Below you know some of the most common types of risk:
Risk analysis involves identifying, analyzing, and taking action to mitigate or control these above risks (and any others). Thus, you reduce the probability of their occurrence and, consequently, minimize their impacts.
Learn more: How to create a risk matrix
How to identify risks and why do it?
But how to deal with risks when you don’t even know which ones are present in your company? This is where risk management comes in, to ensure safety, efficiency, and sustainability in any activity.
By identifying risks, you add benefits such as:
- Loss Prevention: Identify risks early, so you can take preventive measures to avoid or minimize losses. In other words: you can deal with a problem before it even happens.
- Planning and Preparedness: By mapping out risks, you can develop contingency and response plans to ensure that the business is prepared to handle adverse events.
- Informed Decision-Making: Planning and preparation provide valuable information that, in turn, informs strategic and operational decision-making. This way you deal with risks more effectively.
- Compliance and Regulation: Possibly one of the main benefits of this type of care is complying with industry standards and regulations. Especially for companies operating in highly regulated markets, compliance and risk identification/management go hand in hand.
- Resource Protection: By dealing with risks and reducing their impacts, you protect the company’s assets, as well as the people who work in it and the organization’s reputation.
But it is not enough to know the benefits of risk management — it is necessary to know how to do it in practice. As there are several types of risks, there are also numerous ways to identify them.
To make your life easier in this challenge, below we have separated a basic step-by-step guide on how to identify risks:
- Analyze context: Understand the environment in which you are operating. Analyze both internal and external factors that can influence the risks of the operation.
- Identify threats: List the potential events or conditions that could cause damage. You can do this through brainstorming, consulting experts, analyzing historical data, or using some of the tools we mentioned below in this post.
- Assess vulnerabilities: Once you have identified the threats themselves, determine which assets or processes are most susceptible to them. Make a list relating risks/threats to assets/processes.
- Assess the consequences: Analyze the potential impact of each risk identified in the previous steps. With this information, you will be able to define priorities and create actions that focus on the most critical risks, and then on the least critical ones successively.
- Organize documentation: Finally, don’t forget to record the information, data, and conclusions (such as identified risks, causes, consequences, and mitigation measures) throughout this process. Ensure that this material is easily accessible by stakeholders and review it regularly to apply continuous improvement measures.
Free Material: Complete Quality Management Toolkit
7 tools for identifying risks
By following this step-by-step, you will have a solid and effective structure to start your risk identification process. But that’s not all, you also need to implement the right tools. Thus, you have more ease, agility and productivity in risk management.
Below, you learn about seven of the main methods and tools to carry out risk identification comprehensively. Remember to take into account your infrastructure, the nature of your company’s operation, and your implementation possibilities when choosing which ones to use.
The important thing is to add the tools/methodologies that will bring more security and better performance to your organization.
1. Brainstorming
Brainstorming is the act of bringing team members together with the goal of coming up with as many ideas as possible to create something or solve problems.
This creative technique explores the diversity of experiences and provides the opportunity for group members to build on each other’s ideas, making it great for identifying risks.
With brainstorming, people working on the front lines of the company can share their own perspectives on risks. This provides new insights into the same processes and helps bridge the gap between leadership and the team.
This methodology is simple and does not require specialized training. It can be used to identify various types of risks, helping teams from the factory floor to senior management.
2. Matriz SWOT
Generally used for strategic planning of companies and/or creating new projects, the SWOT matrix can be a valuable tool to identify risks from a new perspective.
With it, you identify the strengths and weaknesses of the internal environment on the left side and on the right side you list the opportunities and threats of the external environment. Here’s an example:
The SWOT matrix is useful to identify the positive points that the project or business has, as well as what can be detrimental to the company achieving its goals. Remember that a risk is the uncertainty of a future event, which can be positive (opportunity) or negative (threat).
3. Root Cause Analysis
Some tools commonly used for root cause analysis can also be very useful for identifying risks. Some of the most used and efficient are:
- FMEA (Failure Mode and Effect Analysis);
- Cause and effect diagram (also called Ishikawa or Fishbone);
- Pareto Chart;
Root cause analysis is typically used after a problem has already appeared, but you can apply it preemptively. To do this, take as a starting point an impact or risk to be avoided and then analyze its root cause.
4. Técnica Delphi
The Delphi technique consists of collecting information in an anonymous and structured way. It is usually done through questionnaires and managed by a facilitator responsible for compiling the ideas (risks) pointed out by the experts.
In each round of analysis, the experts individually formulate a list of risks (or answer a specific questionnaire) and deliver this compilation to the facilitator.
The results of the first round, once summarized, provide the basis for the second round, and so on. Based on the results of the information collected in each round, experts can revise their analysis, change it, or present new arguments. This process continues until all participants reach an agreement.
This method is an effective way to reach a consensus, especially when many people are involved in the analysis process. It also prevents mistakes, thanks to the revisions of the previous predictions in each round. In addition, the anonymity of the Delphi Technique allows experts to express their opinions freely.
5. Interviews
Risks can be identified through interviews with project participants or experts in the area in question who seek to carry out the risk assessment. With the diversity of experiences and specialties of each one, it is possible to achieve a greater number of notes in the risk identification process.
6. Inspections
Essential in identifying risks, inspection is the result of visiting the facilities and contacting team members.
Inspections are usually guided by checklists, where items, processes, equipment or facilities to be checked are listed. Its objective is to identify, prevent and correct situations that do not conform to the expected standard. As a result, several risks and points for improvement arise.
7. Review of requirements and documentation
In addition to ensuring the delivery of quality products, projects, and services, compliance with legal requirements also avoids fines, penalties, and various financial losses. Therefore, the analysis and review of the requirements applicable to your operation is essential to identify potential risks.
Another point to be analyzed and that can provide valuable information is the documentation. Review documents related to projects, processes, previous audits or performance indicators, for example.
This can point to lessons learned, as well as problems and their respective resolutions. This way, you will be more prepared if a similar risk occurs or even be able to identify new related risks.
Free Infographic: How to Use the 5 Whys Methodology
Conclusion
Identifying risks is a vital component of the resilience and success of any organization. Using appropriate methods and tools not only allows you to anticipate and mitigate possible threats but also strengthens the ability to respond and adapt to unforeseen events.
By integrating these practices, companies can protect their assets, ensure business continuity, and promote a safer and more efficient work environment. Investing in risk management is, therefore, investing in the sustainable and prosperous future of your company.
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