Every enterprise comes with its own risk component. This is true not just in the business world, but life as well. In a highly complex world as today, the risks and dangers confronting us are legion. A proper risk analysis should ideally explore all the risks that you or organization is most likely to face. A clear study of the risks involved will provide you solutions that will help you to decide the right steps to minimizing the risk factors. Also, a thorough risk analysis will throw light on whether you are adopting the most cost-effective strategies to control risks.
Risk is basically a likely loss that will result in the event of a particular situation or condition happening. It is gauging the extent of possible loss. One way to assign a numerical value to the risk situations is to calculate risk in terms of probability of the event and the cost of event.
Risk = probability of event X cost of event
Such a process will help in evaluating risks objectively. In order to make a detailed risk analysis, there are certain processes to be observed.
First it is important to identify the nature of the risk – whether:
Human – individuals, organizations, death, accident, illness, etc.
Operation – disruption to supplies, order execution, distribution, etc.
Procedural – failures of internal systems and controls, accountability, fraud, etc.
Projects – cost over-runs, poor service or product supply, lack of contingency planning, etc.
Finance – a sudden drop in stock market, interest rates, failure in business, break in partnership, etc.,
Technical – advances in technology, technical failures, etc.
Natural – disasters such as earthquakes, floods, disease, typhoons, etc.
Politics – regime change, change in taxes, government policies, war, etc.
By analyzing risks in different aspects, you will be able to secure your company from such elements. You can also evaluate the systems, structures and operations and see the possible risks involved in each of these areas. You can look for any loopholes or vulnerabilities in these areas and also seek the opinion of an external observer, who might be able to provide new perspectives to the issues under scanner.
Once you have identified the different areas, you can estimate the cost component involved in mitigating these risks. To arrive at the value of the risk you have to multiply the probable event to the cost involved to set it right or ensure it is risk-free. The next step would involve using appropriate methods to address the different risks. You could improvise on the existing assets or go for new methods to counter the risks. Finally it would be useful to make periodic review to test the effectiveness of the system engaged to tackle different risk elements.
To make such a structured risk analysis, Mind Maps are a great boon. You could, to start with, use Mind Map to assess all the risks in as wide an area as possible. They could be broken into all the different elements as financial, human, systemic, etc., and analyzed thoroughly. Because Mind Maps provide unhindered flow of ideas, you will be able to cover a wide canvas unlike the usual conventional linear method of writing them down in list form.
Simultaneously, you could size up the existing flaws or inadequacies in the different operational units that expose your company to dangers or high risks. Formulating contingency plan or risk-mitigating process will be the next step in the process. In all these steps, you will find that Mind Maps pave way for easy flow and creative outlook as they lend themselves to associations and quick links. By providing a full picture of the risks involved, you will be able to address each of them differently and efficiently.
Mind Maps are the simplest and easiest device to run through problems and device solutions. It is the ideal tool for a whole range of activities. You really have to learn and apply Mind Mapping to understand its efficacy.