7 Factors to Include in Your Risk Profile
One of my favorite quotes on risk is from author, Ray Bradbury, “Living at risk is jumping off the cliff and building your wings on the way down.” Often, the problem is not that businesses don’t consider risk; it’s that they don’t really think about it. Without a good risk profile, you will find yourself “barreling through the air” with the ground rushing up to meet you – not the optimal time to build wings! Developing a comprehensive risk profile is essential in mitigating risk and maximizing opportunity.
Most Popular Articles
When creating a risk profile, you should look at:
- Technology and software
- Business and marketplace
- Environmental and social factors
- People
- Timelines
- Budget
- Company readiness
- How ready is it to change?
- Does it already have the capital, resources, and budget to facilitate that change?
- Does it have buy-in from its executive? ( Top Down )
- Do employees have subject matter expertise in that area?
- Are they short on specific knowledge or skills?
- How can the business take part in the change and its implementation?
When the company does not have a high level of readiness, it often lacks the ability to tackle change, and its inherent risk, effectively.
The danger, though, is this can create a checklist mentality: “According to this risk profile, first we look at technology and software – check. Then business and marketplace. Ok, did that. Then environmental stuff – fine.” We tick off the items without putting the necessary thought into them. We should be asking:
- Are they real risks?
- How probable are they to occur?
- What type of impact will they have?
- How do we mitigate, transfer, accept or eliminate them?
These are the questions we forget to spend time on.
So that first bulleted list is not a checklist. It’s not a guide to developing a risk profile. Coming up with risks is the easy part. I can think of 50 risks facing your project right now. Does that mean they are likely, will impact your project, or that I have a plan to mitigate them? No. This is the part of the equation that is often missing in risk profiles.
