Difference between revisions of "Risk Assessment"
From NGO Handbook
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In an NGO context, risk assessment is generally going to be based more on facts and opinions than on numbers. | In an NGO context, risk assessment is generally going to be based more on facts and opinions than on numbers. | ||
| − | Risk assessments provide a framework for prioritizing and mitigating risk. | + | Risk assessments provide a framework for prioritizing and mitigating risk. <membersonly> |
==Basic elements of risk assessment== | ==Basic elements of risk assessment== | ||
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===Step 3: Create mitigation strategies that are scaled to the level of risk=== | ===Step 3: Create mitigation strategies that are scaled to the level of risk=== | ||
Once you have your ratings and rationale documented, it can be helpful to map out your risks in quadrants (see figure below) to help you prioritize and think about next steps. | Once you have your ratings and rationale documented, it can be helpful to map out your risks in quadrants (see figure below) to help you prioritize and think about next steps. | ||
| − | + | <center> | |
| − | Risks that fall into the upper right-hand quadrant will be your top priorities in terms of mitigation strategies. Risks in the lower left-hand quadrant need little attention and may not even need to be addressed at all. Some thought should go into how to treat risks in the remaining two categories. You may want to place limits on how much money and effort you are willing to put into dealing with them, as they are not top priorities. | + | {| border="1" |
| + | |+ '''Risk in Quadrants''' | ||
| + | ! !! Low Probability!! High Probability | ||
| + | |- | ||
| + | ! Severity: Significant | ||
| + | | Low Probability/<br>Significant Impact | ||
| + | | High Probability/<br>Significant Impact | ||
| + | |- | ||
| + | ! Severity: Insignificant | ||
| + | | Low Probability/<br>Insignificant Impact | ||
| + | | High Probability/<br>Insignificant Impact | ||
| + | |} | ||
| + | </center> | ||
| + | <br> | ||
| + | Risks that fall into the '''upper right-hand quadrant''' will be your top priorities in terms of mitigation strategies. Risks in the '''lower left-hand quadrant''' need little attention and may not even need to be addressed at all. Some thought should go into how to treat risks in the remaining two categories. You may want to place limits on how much money and effort you are willing to put into dealing with them, as they are not top priorities. | ||
Be thoughtful about coming up with mitigation plans that minimize effort and expenditure while at the same time effectively managing the risk. When it makes sense, use mitigation plans that cover multiple risks. This can simplify the implementation effort and reduce costs. Don’t pursue mitigation options that can’t be implemented with the available resources. The perfect solution may be out there, but that doesn’t mean you can afford it. Conversely, be careful not to dedicate resources to efforts that won’t have any meaningful effect. Try to find a balance where resources can be dedicated in such a way that they make a difference without breaking the bank. | Be thoughtful about coming up with mitigation plans that minimize effort and expenditure while at the same time effectively managing the risk. When it makes sense, use mitigation plans that cover multiple risks. This can simplify the implementation effort and reduce costs. Don’t pursue mitigation options that can’t be implemented with the available resources. The perfect solution may be out there, but that doesn’t mean you can afford it. Conversely, be careful not to dedicate resources to efforts that won’t have any meaningful effect. Try to find a balance where resources can be dedicated in such a way that they make a difference without breaking the bank. | ||
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If unforeseen issues arise during the project and create further risks, address them as described above. If it becomes clear that certain risks have resolved themselves and are no longer relevant, reallocate any resources dedicated to managing them. Keep an eye on how often certain issues are coming up. If something originally designated as unlikely has turned out to be an issue you deal with every day, rethink your original assessment and adjust your approach to deal with the realities you are encountering. | If unforeseen issues arise during the project and create further risks, address them as described above. If it becomes clear that certain risks have resolved themselves and are no longer relevant, reallocate any resources dedicated to managing them. Keep an eye on how often certain issues are coming up. If something originally designated as unlikely has turned out to be an issue you deal with every day, rethink your original assessment and adjust your approach to deal with the realities you are encountering. | ||
| − | + | ==Why are risk assessments important?== | |
| − | Preparation through risk assessment reduces the overall risk associated with a project. It allows you to categorize and prioritize risks, and it gives you a starting place for ensuring that things go as planned. | + | Preparation through risk assessment reduces the overall risk associated with a project. It allows you to categorize and prioritize risks, and it gives you a starting place for ensuring that things go as planned. |
==Conclusion== | ==Conclusion== | ||
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While you will likely find that at least some aspects of these methodologies are helpful in your decision-making, it should be understood that no assessment process can predict the future with absolute certainty. Use [[impact assessment]]s as guidelines, but remember that as the project unfolds, new and unexpected eventualities can still arise. | While you will likely find that at least some aspects of these methodologies are helpful in your decision-making, it should be understood that no assessment process can predict the future with absolute certainty. Use [[impact assessment]]s as guidelines, but remember that as the project unfolds, new and unexpected eventualities can still arise. | ||
| + | |||
| + | ==External Links== | ||
| + | |||
| + | * Berghof Handbook for Conflict Transformation: http://www.berghof-handbook.net/ | ||
| + | * Hands-On PCIA: http://action.web.ca/home/cpcc/attach/Hands-On%20PCIA%20--%20Handbook%20X%20--%20BUSH%20Final%20Author%5C's%20Version1.pdf | ||
| + | * Online Survey Tool: www.surveymonkey.com | ||
| + | |||
| + | ==References== | ||
| + | * Barrow, C. J. Social Impact Assessment : An Introduction /. London: Arnold, 2000. http://www.questia.com/PM.qst?a=o&d=102534049. (accessed January 30, 2007) | ||
| + | * Bush, Kenneth. “Hands-On PCIA” Under the Auspices of the Federation of Canadian Municipalities and the Canada-Philippines Local Government Support Programme. http://action.web.ca/home/cpcc/attach/Hands-On%20PCIA%20--%20Handbook%20X%20--%20BUSH%20Final%20Author%5C's%20Version1.pdf (accessed January 30, 2007) | ||
| + | * "Environmental Impact Statement." In The Columbia Encyclopedia 6th ed., edited by Lagass, Paul. New York: Columbia University Press, 2004. http://www.questia.com/PM.qst?a=o&d=101242845 (accessed January 30, 2007). | ||
| + | * Day, Kevin. "Can Risk Assessments Be Fact-Based? Subjectivity Can Never Be Removed Completely from the Risk Assessment Process, but It Should Be Stripped from the Data-Gathering Phase." Security Management, September 2003, 248+. http://www.questia.com/PM.qst?a=o&d=5002554102. (accessed January 30, 2007) | ||
| + | * DeMarrais, Kathleen and Stephen D. Lapan, eds. Foundations for Research: Methods of Inquiry in Education and the Social Sciences. Mahwah, NJ: Lawrence Erlbaum Associates, 2004. http://www.questia.com/PM.qst?a=o&d=110599546. (accessed February 20, 2007) | ||
| + | * Derman, William and Scott Whiteford, eds. Social Impact Analysis and Development Planning in the Third World. Boulder, CO: Westview Press, 1985. http://www.questia.com/PM.qst?a=o&d=51258517. (accessed January 30, 2007) | ||
| + | * "Evaluation and Use of Epidemiological Evidence for Environmental Health Risk Assessment: WHO Guideline Document." Environmental Health Perspectives 108, no. 10 (2000): 997. http://www.questia.com/PM.qst?a=o&d=5001146299. (accessed January 30, 2007) | ||
| + | * International Association for Impact Assessment in cooperation with the Institute for Environmental Assessment, UK. Principles of Environmental Impact Assessment Best Practice. Fargo, USA: International Association for Impact Assessment, 1999. http://www.iaia.org/Members/Publications/Guidelines_Principles/Principles%20of%20IA.PDF (accessed January 30, 2007) | ||
| + | *“MDG 1: Eradicate Extreme Hunger and Poverty.” CGAP. http://www.microfinancegateway.org/section/resourcecenters/impactassessment/impacts/mdg_1/ (accessed February 20, 2007) | ||
| + | * Paffenholz, Thania. “Peace and Impact Assessment Tip Sheet.” SDC. http://www.sdc.admin.ch/ressources/resource_en_92756.pdf (accessed January 30, 2007) | ||
| + | * Quigley, R., L. den Broeder, P. Furu, A. Bond, B. Cave and R. Bos. Health Impact Assessment International Best Practice Principles. Special Publication Series No. 5. Fargo, USA: International Association for Impact Assessment, 2006. http://www.iaia.org/Non_Members/Pubs_Ref_Material/SP5.pdf (accessed January 30, 2007) | ||
| + | * Simanowitz, Anton. “The What, Why, and How of Impact Assessments.” CGAP. http://www.microfinancegateway.org/section/resourcecenters/impactassessment/what (accessed February 20, 2007) | ||
| + | * Vanclay, Frank. Social Impact Assessment International Principles. Special Publication Series No. 2. Hobart, Tasmania: International Association for Impact Assessment, 2003. http://www.iaia.org/Members/Publications/Guidelines_Principles/SP2.pdf (accessed January 30, 2007) | ||
| + | * Wathern, P. "1 An Introductory Guide to Eia." In Environmental Impact Assessment: Theory and Practice, edited by Wathern, Peter, 3-30. London: Routledge, 1992. http://www.questia.com/PM.qst?a=o&d=103493021. (accessed January 30, 2007) | ||
| + | * Wathern, Peter, ed. Environmental Impact Assessment: Theory and Practice. London: Routledge, 1992. http://www.questia.com/PM.qst?a=o&d=103493001. (accessed January 30, 2007) | ||
Latest revision as of 07:28, 17 July 2008
This article was based on an article prepared for the NGO Handbook by Jennifer L. Tavis, titled, "Impact Assessments and Risk Evaluation.
Risk assessment is the methodical collection and ranking of risks according to severity of consequences and probability of occurrence, and then the creation of a plan to mitigate identified risks. It is used with specific technical meanings in a number of contexts, from finance to medicine, but certain common elements can be identified across the board.
In all cases, risk can be defined as the potential for negative eventualities, including loss, injury, and damage. Assessing risk involves taking into account not only the severity of the negative eventuality but also its probability. There are mathematical formulas for assessing risk, but these can only be used if all of the data you are trying to analyze is quantitative, which is rarely the case outside of the world of finance.
In an NGO context, risk assessment is generally going to be based more on facts and opinions than on numbers.
Risk assessments provide a framework for prioritizing and mitigating risk.
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