What is a risk register and why do you need one?
The answer is simple, to protect you and your organization! Any organization can be caught off guard if they do not have plans in place to avoid unexpected expenses.
A risk register is a living document used in risk management and project management to prioritize, list, and mitigate risks for an entire organization, or a single project. By rating risks, managers can determine priorities to focus on in the short or long term.
This ISO 31000:2018 standard indicates that managing risk at all levels is critical for governance and leadership. Risk is defined as the effect of uncertainty on objectives. It can be positive, negative or both.
It is important that the cost of risk management does not outweigh the benefit. Risk management will save unexpected expenses such as insurance claims, legal costs, stolen property, and turnover.
One goal of risk management is to create a risk-aware culture, thus, including knowledgeable stakeholders in the risk process is key. Multiple perspectives can eliminate blind spots and leads to a richer assessment.
The following, are some of the benefits of a risk register:
Allows management to prioritize risks, based on rating.
Allows senior management to show creditors, insurers, and business partners that business practices are under control and evaluated every six months and when new events occur.
When an event such as a fire, flood or pandemic occurs, specific plans are in place so that the business can save lives, preserve assets, and continue business.
Allows for step-by-step risk assessment by the Board of Directors.
What type of company should have a risk register?
All companies- including not for profit.
Risk registers are useful for start-ups, mature companies that have just started new products or business lines.
Charities can benefit as much as for-profit organizations.
Sports organizations must be mindful of reputational risk and recent Olympics have stressed the mental health of athletes as well. The safety of children in sports has become paramount in sports and volunteer organizations.
Contact Laura Dickson to learn more.