Did you know that risk identification is the most important part of the risk management process? Essential for the success of projects and even for the organization as a whole, risk identification involves the detection of potential threats before they can negatively impact collaborators or the company.
Risks are inherent in business and good management can be the determining factor for success in achieving an organization’s goals, because if you fail to identify a risk, you also miss an opportunity to avoid it, and missed opportunities can lead to significant losses.
Risks can come from many sources and having an overview of all of them can be confusing and complicated. In the following figure, we highlight some of the types of risks:
But how do you find problems you don’t even know exist?
In this article, you will learn about the methods and tools for identifying risks in a more comprehensive manner, providing more security and better performance to achieve your organization’s goals.
Brainstorming is the act of bringing together team members to come up with as many ideas as possible to create something new or to solve problems. This creative technique explores the team’s diversity of experiences and provides an opportunity for members to build on each other’s ideas. It’s great for identifying risks.
With brainstorming, people working on the front lines of the company can share their perspectives on risk, providing fresh insights on the same processes, thus helping to close the gap between management and the team.
This methodology is simple and requires no specialized training. It can be used to identify different types of risks, helping everyone from the teams on the factory floor to top management.
2. SWOT matrix
Generally used for strategic planning in companies and for new projects, the SWOT (Strengths, Weaknesses, Opportunities and Threats) matrix can be a valuable tool for identifying risks from a new perspective.
We identify strengths and weaknesses of the internal environment on the left side and, on the right side, the opportunities and threats in the external environment:
The SWOT matrix is useful for identifying the positive points of a project or business, as well as what can be detrimental to achieving goals. Remember, risk is the uncertainty of a future event, which may be positive (an opportunity) or negative (a threat).
3. Root Cause Analysis
The tools commonly used for root cause analysis can be very useful for risk identification as well. We can cite as examples:
- FMEA (Failure Mode and Effect Analysis)
- Cause and effect diagram (Ishikawa or fishbone)
- Pareto charts
- 5 WHYs
Typically, root cause analysis is used after the manifestation of a problem, but we can also apply it preventively, taking an impact or risk to be avoided as a starting point.
4. Delphi method
The Delphi method consists of gathering information in an anonymous and structured manner, usually through questionnaires, managed by a facilitator responsible for compiling the ideas (risks) identified by the experts.
In each round, the experts individually formulate a list of risks (or answer a specific questionnaire) and submit it 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 review or change their opinions and 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. Furthermore, anonymity means that experts can express their opinions freely and avoid errors, reviewing earlier opinions in each round.
Risks can be identified through interviews with project participants or experts in the area in question to carry out the risk assessment. With the diversity of their experience and expertise, you can obtain a greater number of opinions in the risk identification process.
Very important and essential for identifying risks, the inspection is the process of visiting facilities and contacting team members.
Inspections are usually guided by checklists, which list items, processes, equipment or facilities to be checked. The goal is to identify, prevent and correct situations that are non-compliant with expected standards.
6. Review requirements and documentation
Requirements contain significant risks. In addition to ensuring the delivery of quality products, projects and services, compliance with legal requirements also avoids fines, penalties and various financial losses. For this reason, an analysis and review of applicable requirements is essential.
Another area to be analyzed, and which can provide valuable information, are documents. For example, it is important to review documents relating to projects, processes, past audits or performance indicators, as this documentation review can point out lessons learned, problems and their solutions, thus making you better prepared should a similar risk occur, or even to identify new risks.
Discover how SoftExpert solutions can help your company adapt to change, improve processes and achieve goals. Request a demo right now.
Like the article? Access other related articles: