Risk Myth Busters – Unlock the myths about Risk Management
Myth 1: Risk management is waste of time and money:
If the head of the house hadn’t thought about safeguarding the house, his house could be ransacked or collapsed. If the health patient hadn’t thought about health insurance, the patient could spend his life savings on treatment. If the project manager hadn’t pondered about the risk management for the project, the company could have faced heavy loss, or the project might fail.
The risks can be identified and handled mentally in a blink or a second or in a year. Any risk cannot be ignored. Read this blog to learn how to identify risk in a blink:
https://blogs.perficient.com/2018/02/07/risk-blink-power-observation/
Risk management is not a waste of time or money. It resembles an investment and insurance for time and money. The head can safeguard the house with good-quality locks. A company can shield the assets with CCTV surveillance, anti-virus software, etc. A project manager can safeguard the project and company with a good risk management plan.
Prevention is better than cure. Risk management is a practice and culture where everyone lives in it.
Myth:2 There are no risks foreseen – No Black Swans around?
It is generally easy to ignore the risks but difficult to control them once it occurs. Risk is both tangible and intangible. Any conflict between countries or businesses happening miles away can impact the lives of people and another country’s economy. The world is encircled by uncertainties which were allured to as black swans. For example, there is a risk of a common person getting hit by an alcoholic driver. Even a common person needs to predict dangers, risks, and uncertainties before coming up with a plan.
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In the technology world, there are codes, malware, virus, trojans, so forth that are invisible to our eyes. If there is no plan to minimize the risk, the company will go for a toss.
There are policies, procedures, plans, etc. as part of the risk management plan to secure the organization’s technology
A project without risk management is like a diamond watch without running time. There is no watch without time, likewise, there is no project without risks. Find out more in this blog: https://blogs.perficient.com/2022/03/03/diamond-timeless-watch/
Myth:3 It is expensive tool in huge companies
This is perhaps the biggest myth that needs to be unlocked. In addition to the fact that organizations need risk management, however even people need a good risk management plan to assess the risks. The risk applies to every class of people and companies. Everyone is a risk keeper because risks never sleep. https://blogs.perficient.com/2019/03/12/risks-never-sleep/
No husbands have a software tool to enlist the complaints from his family. Risk management is not generally about having a software tool to enlist the risks and refreshing it with the updates. The risk management can be managed mentally by analysing the risks or transferring the risks to other parties (insurance) or lessons learned can be through word of mouth.
A huge company indeed needs to have risk management tools to consider the full range of risks confronted consistently and examine them. Huge companies need to focus, analyze and prioritize the risks for strategic plans.
Not every individual or company needs a software tool. A simple memo or excel sheet can be used to handle risk management. Anyone can recommend a better lock or insurance scheme to anyone.
Myth:4 Risk management is very heavy Statistical:
Does risk management involve statistics? Yes, True but not all risks require heavy statistical work. There is no need to get statistical work to get a good lock for your house, but a little statistical work is required to get home insurance. These are two different factors to assess risk. A lock is a quantitative factor whereas insurance is qualitative.
Some risks can be measured reasonably well. There are various factor measures and models to measure the risks. Risk management differs in waterfall methodology and Agile Methodology too. In waterfall methodology, risk management is planned prior to the kickoff. In agile methodology, risks will be reviewed early and constantly during the development. You can learn the difference between agile risk management and traditional risk management in the given blog link :
https://blogs.perficient.com/2017/08/18/agile-risk-management-vs-traditional-risk-management/
Everyone needs to insure the locks, keys and themselves.
Life is more risk management, rather than exclusion of risks – Walter Wriston.
Great read as usual Arun! I always walk away a little wiser after reading your blogs!
Very informative blog, But I think operational risk management is essential for financial institution to achieve risk management compliance. I also gathered some detailed information on the Shield.