'Risk is as much about the possibility that something good won't happen as much as the threat that something bad will happen.' (Source: The Economist Intelligence Unit, Managing Business Risks: An Integrated Approach, 1995).
Australia has been a leader in the area of risk management with the release of AS/NZS 4360:1999 Risk Management and CPA Australia has used the framework of the standard to assist in the development of this website. Risk, as defined in the standard is the chance of something happening that will have an impact upon objectives. It is measured in terms of consequences and likelihood. Risk management is defined as the culture, processes and structures that are directed towards the effective management of potential opportunities and adverse effects.
Risk management is now recognised as an integral part of good management practice. It is an iterative process consisting of steps, which, when undertaken in sequence, enable continual improvement in decision-making. It can be applied at many levels of an organisation and at both the strategic and operational levels and to specific projects, to assist with specific decisions or to manage specific recognised risk areas.
Risk management is the term applied to a logical and systematic method of establishing a context, identifying, analysing, evaluating, treating, monitoring and communicating risks associated with any activity, function or process in a way that will enable organisations to minimize losses and maximise opportunities. Risk management is as much about identifying opportunities as avoiding or mitigating losses.
There are many risk management models in the marketplace but the AS/NZS 4360:1999 standard will be a good starting point and prove to be a very powerful tool. This standard is appropriate at all stages in the life of an activity, function, project, product or asset but the maximum benefit is usually obtained by applying the risk management process from the beginning. However, often a number of differing studies are carried out at different stages of a project. Anyone new to the discipline of risk management should familiarise themselves with the Standard.
