How to Identify, Assess, and Analyze Risks in Your Business

Johnny Kollin led an interactive risk workshop at a business breakfast organised by the Swedish Business Council UAE on 26 April 2021. The workshop focused on the essentials of risk management for small and medium enterprises. Kollin also shared practical tips on how companies can use risk management as a competitive advantage to increase the chance of succeeding with their business strategies. Business owners and executives from the council’s Small and Medium Enterprise Networking Group (SMENG) attended the event.

Creating a common Risk Language

To create a risk-aware culture, it is essential to ensure everyone in the organisation understands the terminology used. It is easy to assume everyone means the same thing when using words like risk, risk appetite, and risk management. However, that is not necessarily the case. The fact that the word “risk” is one we use in everyday life further increases the importance of ensuring everyone uses the terms in the same way in an organisation.

To demonstrate his point, Kollin asked the participants to select their preferred definition of risk from a list of four alternatives:

• Risk is “the uncertainty of outcome, whether positive opportunity or negative threat, of actions and events.”

• “Risk is the combination of the probability of an event and its consequence. Consequences can range from positive to negative.”

• Risk is “the effect of uncertainty on objectives. The effect may be positive, negative or a deviation from the expected.”

• Risk is “an event with the ability to impact (inhibit, enhance, or cause doubt about) the effectiveness of the core processes of an organisation.” (Hopkin, P, 2017. Fundamentals of Risk Management.)

The chart below shows the combined ranking of the four options based on the 12 votes. Overall, the most preferred risk definition was that provided by The Crown in “The Orange Book - Management of Risk - Principles and Concept”. However, as you can see in the chart, their opinions varied greatly.