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. Others
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.
About the author:
About the Author:
Dr. Vj Mariaraj is a Mind Map enthusiast and has been using Mind
Maps for the past twelve years. He has created over 5650 Mind
Maps. To learn more about mind mapping send an email to
freemindmap@aweber.com . He is the founder of
BusinessBookMindMap.com that creates Mind Map Summaries of
Business Books. To learn more visit
http://BusinessBookMindMap.com/mind-map.php?ga20
