Risk Management

Eliminating and mitigating risk is an essential part of business. Everyday we make choices about how to solve problems and use resources to support our business goals. But how do we know we're making the right choices, and more importantly, what do we do if we make the wrong ones?

Managing risk is more art than science. How we manage risk varies with each organization, and depends on variables such as:

• Culture — How much risk can the company tolerate?
  
• Knowledge/Skill Sets — Do we have the expertise?
  
• Time — How fast do we need to fix a problem?
  
• People — Do we have the right people for the job?
  

Leading research groups recommend investing in operational planning and strategic development to ensure your risk management efforts are effective. Specifically, consider the following points regarding your operational and risk management strategy:

• Must be process focused, not technology focused.
• Must have business sponsorship and participation.
• Must have an overall organizational strategy and methodology.
• Do not select or build a tool until you have defined the process.
  

Although most organizations understand the importance of documented and well-defined processes, few dedicate the resources needed by this critical activity. This practice leads to continual service disruptions due to a lack of operational consistency.

Implementing a vendor's automated tool that (hopefully) has a well-defined process, or worse, building your own tool without first having a well-defined process is a poor investment of resources. Unfortunately, many organizations take this approach only to find out later that the tool fails to meet their objectives.

So, how can we improve our success with risk management?

The answer is simple — document your processes. While this may sound a bit glib, in all seriousness it's a very effective solution.

Documented, accessible, well-defined processes improve operational efficiency and simplify risk management. Knowing what you're doing and how to do it is a big first step in reducing risk and avoiding catastrophic failure.

By Harry Hiles, HBH Technology LLC — 21 Sep 2008