Risk is the possibility that an event will occur and adversely affect the achievement of objectives.
Risk Management is, simply put, the process of managing risks.
As part of our planning for the festive season we set objectives that we would like to achieve over the holiday period. These objectives can range from visiting family, taking a holiday, spending time with loved ones, etc.
Whatever your objectives over the festive season, they will most likely involve travelling and spending money, as well as packing your belongings. We therefore need to set our objectives when engaging in these activities.
We need to set up a budget for the festive season and set up a route plan that we will be travelling, and make sure we pack the necessary gear for the trip. These are therefore activities that will lead use fuel, and vehicle service plans running out while on holiday,
• Risk of not packing the appropriate gear for the weather conditions at your travel destination.
We therefore need to conduct the risk management process, which is the process of setting objectives, identifying the risks that will prevent us from achieving our objectives, conducting an assessment of the risk identified, responding to the risk, putting up controls to prevent the risk from occurring and continuously monitoring this set of controls. The process that we need to follow is:
Step 1: Setting up the objective. During this process we set up our objective for the festive season, in terms of what we want to do, when, and how much money we are going to budget for the specific activity. This includes timing the trips and routes.
Step 2: Risk/Events Identification. After setting
the objectives, identify the risk/events that will
prevent us from achieving our objectives. Note
that these events can be known and unknown
(emergencies) events, and can be anything from
bad roads, vehicle tire conditions and service, to
time constraints etc.
Step 3: Risk Assessment. During this step
we assess the likelihood of the risk occurring.
Additionally, we consider the impact that the risk
would have should it occur. We rank the risks from
highest to lowest in terms of likelihood and impact.
Step 4: Risk Response. During this step we
respond to the risk based on the rankings. We either
Tolerate, Treat, Terminate or Transfer. For
example, we can tolerate the risk of bad roads, treat
the risk of running out of fuel or terminate the risk
of bad tires.
Step 5: Control Activities. During this step we set
up controls to prevent the risk from occurring. The
controls should be able to effectively mitigate the
risk, e.g. we carry jerry cans of fuel to mitigate the
risk of running out fuel.
Step 6: Monitoring the controls. Throughout
the festive season we need to monitor whether the
controls are working effectively or not, e.g. keep
monitoring your budget, or keep monitoring the
condition of your tires when travelling.