Risk is something that we accommodate very well on a daily basis, both at home and in business. The statistical probability of injury or death that we face in simply going about our day-to-day lives might be disturbing, but this doesn’t (or shouldn’t) prevent us from carrying on with our lives.
Assessing all activities and ascribing them probabilities of failure sounds tedious, but you’ve probably already done this informally to identify the biggest risks in your business. Having a more formal process does require more work at the beginning but would prevent the kind of risk listing where almost every activity in the company is assessed and you need to have a record somewhere to prove that you have assessed your risks.
Aon conducted a survey of the risks perceived by business in April 2013 (The Global Risk Management Survey). The first three of the top 10 risks which businesses identified (see below) were areas over which we have little (if any) control – and expectations for ranking of 2016 risks are shown in brackets:
Acknowledgement of the existence of risk doesn’t always lead to a solution to reduce the probability of it happening, but noting risks shows that you have at least considered the potential impact.
We hope that you find this report interesting and informative. Please contact Robert Russell or Stephen Ibbotson if you have any suggestions or ideas which you would like the ICAEW Finance and Management Faculty to explore.
Comments and suggestions to Robert Russell, Technical Manager, Finance and Management Faculty