Risk assessment methods

There are many definitions of risk. In a nutshell, risk refers to a situation in which a given decision entails the possibility of various negative and positive consequences. Both in private life and in any industry, we have to deal with it to a greater or lesser degree. The good news is that it can be controlled!

We can be helped by risk management, which involves recognizing and assessing it and preparing an action plan to minimize the negative impact of too much risk.

Planning the management process

Risk is often associated with the unknown and changeable. In order for its management to be fruitful, it is important to make sure that the plan is carried out regularly and before major changes in the organization. "What's written, won't perish!"-it's a good idea to write down for yourself the areas of possible risk and, on the basis of such a list, establish measures to minimize losses.

Risk assessment, on the other hand, should be preceded by its recognition and estimation. It is worth asking yourself some important questions at such a stage:

1. What kinds of risks affect the implementation of my project?
2. How will they affect it?
3. What are the characteristics of the risk?

If we already know the answers to the above questions, it will be easier to use ready-made risk assessment methods.

Risk assessment methods

• Scenario analysis

In this method, several possible scenarios are envisioned, and the different risks that may occur in each scenario are taken into account. With this analysis, we are able to consider the best, worst and expected option. Scenario analysis can be helpful in planning future policies and strategies, as well as considering current activities. It shows how developments are affected by opportunities and threats.

• SWIFT method

Otherwise known as the "what if?" method. It uses a set of words/sentences to stimulate participants to identify threats. The team's use of "what if?" phrases allows them to examine how a system or procedure will work after an undesirable event, what deviations from the norm will occur. In order to proceed with a SWIFT analysis, one needs to know the hazards, pre-existing events, safeguards currently in place, and legal requirements and restrictions.

The purpose of asking questions like "what if...?", "if ever...?", "what could happen...?" is to force the team to analyze potential scenarios of events that could occur in the organization's operating environment, their causes and consequences. The advantage is the versatility of this method, as we can apply it to almost any situation.

• FMEA (Failure Mode & Effect Analysis) analysis

This method involves the analytical determination of cause-and-effect relationships of potential product defects and their inclusion in the risk analysis. Its goal is to consistently and systematically identify potential defects in a product or process, and then eliminate them or minimize the risks associated with them. It can be used for highly complex processes in both mass and unit production.

Risk management is a broad field that allows us to decompose risky aspects and control them more easily.

The above risk assessment methods are just one of many cited in the risk management literature. Each method differs slightly from one another. In order to use them effectively, it is worthwhile first, with a cool head, to identify the focus of possible risks. By doing so, we are able to apply measures appropriate to it.