Some years ago, I was the audit chair of a public sector body and was asked to create its first separated risk committee. This wasn’t an easy task at the time but due to the need to make an unexpected strategic change its existence eventually proved to be more valuable than anyone expected! But that’s a story for another time…
In the process of creating the board’s very first risk register we needed to revisit the organisation’s objectives through stakeholder re-engagement, we also found it was too easy for various team members to misinterpret the key risks, which in turn could lead to resources being applied to developing risk mitigations that just didn’t work.
Fortunately, I was introduced to (but cannot remember who to attribute) a sentence layout for describing the risk that aims to ensure a key risk will be both documented and re-read in a consistent manner throughout the organisation. It is really important that having been identified, prioritised and resourced, the teams working on these key risk really did create and test appropriate mitigations rather than misdirect their efforts – resulting in unexpected risk consequences later!
The format of the risk statement is as follows:
'Because of… (cause) there is a risk that… (risk) might occur, which would lead to… (effect)’
And a completed (but very simple) example might be:
‘Because of Covid-19, there is a risk that cash shortages might occur, which would lead to our business being unable to pay debts as they fall due’
Please try this yourself, or comment back to me. Have you used a similar approach? Has it worked? Is your approach more mature, effective and easy to share?
For much more valuable and extensive risk guidance than this personal tip, visit www.riskcoalition.org.uk/guidance
Bryan Foss - Risk Coalition