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Should your organization execute a Risk Assessment? Is it worth the time and effort? It is often a long and complicated process, which may discourage some organizations from fully committing to it.
This article will address the importance of the Risk Assessment as a general business tool, as well as in the context of Business Continuity Planning.
In addition, we will address some of the most common challenges and concerns regarding the Risk Assessment process.
We all assess risks
The idea of assessing risk in various situations should be familiar to everyone. Insurance companies assess risks to determine the insurance premiums they will charge. Investment firms assess risks to determine where and how to invest their client’s money.
Average people assess risks daily to guide their actions. Unsurprisingly, a Risk Assessment is one of the most important components of Business Continuity Planning (BCP).
Correctly determining the risks facing your organization is the cornerstone of creating relevant business continuity plans, IT disaster recovery plans, emergency response and any other incident or crisis-related plans.
Outside of BCP, Risk Assessment can also enhance your organization’s strategic decision-making abilities. The Risk Assessment will increase your organization’s awareness of threats and vulnerabilities, which will let your management make better decisions.
What are the steps to assess risk?
There are two main steps involved in the Risk Assessment. First, the aim is to identify risks and threats facing an organization’s services, resources and overall operations. Once the risks have been identified, the next step is to assess those risks to determine the potential impacts to the organization.
The end goal is to enable the organization to determine the most effective use of its resources to reduce these potential impacts. Potential risks, as an example, can include cyber-attacks, natural disasters, supply chain issues, active assailant situations, or any other event that can negatively impact your organization’s operations.
It can be tempting to assume that the risk your organization faces is the same as any other organization so that you can reduce the efforts required to complete the Risk Assessment process.
However, each organization will have slightly different impacts from the same risks and chances are, the probabilities of those risks will also differ.
All Business Continuity Plan components crucially depend on the information obtained through the Business Impact Analysis and Risk Assessment exercises, which is why considerable effort needs to be put into the process.
Organizations that do not put their best efforts into these exercises are usually left with subpar Business Continuity Plans. The framework of the Risk Assessment process will be roughly the same for all organizations, but the actual results will be highly individualized.
Should you spend time and effort to complete this activity?
Unfortunately, even organizations that want to put the efforts into the Risk Assessments are not immune to challenges. Smaller organizations can struggle to balance the Risk Assessment exercise with their employees’ regular tasks and workloads.
It may prove difficult to allocate enough time to this exercise without negatively impacting regular operations. On the bright side, the Risk Assessment is usually faster and easier for smaller organizations because of the decreased complexity of their operations.
They also stand to benefit immensely from performing a Risk Assessment, because they usually have a tougher time recovering from incidents and are more likely to shut down following large-scale disasters.
Larger organizations have more resources to commit, but the process is usually much more complicated as it involves more groups and requires more resources to complete. Organizations with multiple business lines, numerous divisions, and a large workforce tend to be exposed to more risks and it could be difficult to fully determine the potential impacts and likelihoods of each of them.
There is also a dependency between various business units and functions which must be considered during the process. An incorrect or incomplete Risk Assessment can lead to decreased business continuity plan efficiency and wasted resources.
StratoGrid Advisory is a Business Continuity Management (BCM) Advisory firm in the Ottawa/Gatineau region that can provide you with the experience and knowledge needed to successfully execute a Business Impact Analysis and Risk Assessment, and to implement a BCM Program in your organization.