A risk register is defined as a document leveraged as a risk management tool and resource to comply with regulatory compliance. Basically, it acts as a repository of all identified risks and includes information about each risk. It can be displayed as a table as well as a scatterplot. As per ISO 73:2009 risk management, a risk register is referred to as the record of information about identified risks.
What Are The Key Elements Of Risk Register?
Following are the prominent elements that define the risk register:
- Risk Category
The risk is categorized under the scope, cost, time, resources, environment, and other key categories. These categories assist in filtering out the likelihood of risks and grouping them into a specific section for future reference.
- Risk Description
A brief description of the potential risk is added to the register. For instance, if a risk is identified in the resource section, then you must mention a description like there is a conflict between the team members and resources in terms of time given to complete the project.
- Risk ID
Each risk is provided with a unique identification number. This allows the team to identify and monitor the risk in the register in a better manner. If the risk is identified in the second category, then the risk id will be 2.1.
- Project Impact
A small description needs to be included defining the impact of the risk on the particular project. For instance, due to the lack of labor, the project may not be completed and delivered in the scheduled time. All the possible impacts of the project should be included in a short and concise manner.
This includes the probabilities of the occurrence of the risk at some point and turns it into a risk. Although it is mainly qualitative (low, medium, and high), however, if enough information is available, it can also be quantitative. You can simply mention, the likelihood of the risk of delay in the project is ‘High.’
The potential implication of the risk if it grows and becomes an issue for the project. For instance, due to the lack of resources, the delay in the delivery of the project can have high consequences.
- Risk Rank
This is the degree or level of the potential risk. It combines both probability and implication. If both these categories are high, then the risk rank will also be high.
- Risk Trigger
This defines as the indicators that signal the implementation of contingency plans. For example, if the labor conflict is not solved within two weeks, then the contingency plan should be put into action.
- Prevention Plan
This is referred to as an action plan in order to protect the occurrence of the risk. For instance, it includes communicating with the team members to come up with a solution for the labor issue and get the project back on track.
- Contingency Plan
It is defined as the action plan designed to address the risk in case it becomes an issue. For instance, training and upskilling the existing workforce to complete the project on time.
- Risk Owner
It is the person who is responsible for taking care of the risk and executing the prevention or contingency plan.
The Prominence Of Risk Registers
Risk registers are not just lists of risks; instead, they gather and facilitate a systematic approach to risk management. Here is why every organization needs a risk register:
- Risk Identification
There are different means through which companies can identify risks. Whether it is brainstorming in the boardroom, assessing mini risks by individuals, or risk assessment in the field. The severity or complexity of the risks does not determine how the risk is explained. Every risk must contain an adequate description to provide an overall understanding of what exactly the risk is.
- Risk Rating
Once the risk has been determined, they are rated on the probability of an event occurring as well as a consequence if the event occurs. Subsequently, risk ratings are used to emphasize high-risk activities and prioritize investigative actions or responses. They are further used to make sure proper measures are implemented to monitor and administrate control over the determined risk.
Additionally, risk ratings also assist in identifying which control hierarchy to be used when controlling or mitigating the risk. The process includes mitigation, isolation, substitution, engineering, or controlling.
- Risk Management
Post the identification, rating, and control of the risk; a dedicated software is used that transfers the details of the risk to the risk register. This is a dedicated place where managers can review and re-evaluate the risk, add resources, changes, or controls.
Additionally, they can also determine new or regularly occurring trends, opportunities for training and assign corrective actions.
Regular reviewing of risk registers can assist in helping to:
- Identify potential environmental issues or behavioral trends.
- Determine risk that may be subject to business or legislation changes.
- Explain to others like stakeholders, investors, regulators, etc., the management of risks.
- Design adequate mitigation or control measures to reduce or eliminate the risk prior to their occurrence.
- Document proper safe work procedures
- Accomplish safety objectives and work on continual improvement.
How To Implement a Risk Register?
The first step in making a risk register is to determine the risks. Every project is different, but companies that work on similar projects throughout the year might have access to historical data. The information can be used to review and identify common risks associated with particular types of projects. Moreover, you can also anticipate the risk on the basis of market forces or on personal issues, or common staffing. Following are the steps that you need to follow when making a risk register:
- The Collection Of The Risks
In order to collect the risks that can come up when managing a project, you need a systematic approach to ensure you are as comprehensive as possible. The risk register is a broad system that can further track whether or not the risk appears and evaluate the corrective actions that you have implemented to solve the issue.
Moreover, when registering such risks on a spreadsheet or within your management software, you get a place where you can store the data and monitor certain risks across the project. This will allow you to better oversee whether or not the actions that you have implemented to solve the risk are actually working. Therefore, a risk tracking document keeps all the risks on a tight rope so that your project continues to work efficiently and effectively.
- The Documentation Of Risks
It is imperative to document the risks in order to ensure you successfully complete the project. When you document the risks, it provides you with a dedicated place where you can identify the risk, assess the history from where it occurred to where you actually solve it. Moreover, you can also tag the risk to the person who discovered it and works on its management. You can also add remarks on how likely the risk will influence the project.
- Monitoring Of The Risks
When you document all the risks, it further gives a place in order to assign a team member to a particular risk. That particular individual will then be responsible for overseeing the risk and leading the corrective actions required to eliminate the risk or address it once any issue has arrived. The documentation of this process in a particular register will ensure that you do not lose track of the risks as the project proceeds. This implies that risks do not turn into a big issue, run out of signs and hamper the success of your project.
- Solve The Risks
Lastly, when you have addressed and eliminated the risk, you can check it off the list. There is a different kind of satisfaction when you check off the risk from your paperwork. Now, you can focus primarily on completing the project successfully. Moreover, now that you have checked off the risk, it means that you do not have to continue to invest resources against an issue that no longer exists. It facilitates you with more control and better communications with the stakeholders and team.
Tracking The Risks With Risk Register
Here are the steps to follow in order to track the risk and make the optimum use of the risk register:
- Finding Out The Risks
Gather your team for a brainstorming session to find out potential risks. Each team member works on different project areas. Therefore you can leverage their expertise to assist in identifying potential project risks. Moreover, the organization should also communicate with the stakeholders to take their concerns into consideration and track those risks as well. Make sure that you assess all areas of the projects to identify potential risks that can hinder the success of the project.
- Elaborate On The Issue
The next critical step is to elaborate on the risks that you have identified earlier. When explaining the risks to your team members, try to be as thorough as possible while keeping the points to the essential factors. When employees are dealing with vague risks, it will be challenging for them to determine whether or not they have turned into real issues. For instance, do not just write chemical components; instead, explain the dangerous impact of the chemical that should be taken care of when using it.
- The Implication Of The Risk
The next step is to know everything related to the impact of the risk so that you can develop a strong strategy to address the same. For example, due to the adverse effects of COVID-19, many sectors experienced layoffs regionally. This step involves determining the impact of this layoff on the success of your particular projects.
When there is less workforce working on a project, it is likely to cause a delay in the delivery. You need to determine how long this delay will be, for example, by one month, three months, six months, or more. Understanding the impact will allow the companies to prepare for an alternative in a timely manner like outsourcing some work, finding labor outside that particular region, etc.
- Reacting To The Risks
To complete this step properly, you will need to invest proper time and effort. Although you want to be thorough, the response should not be that excessive. The aim should be to keep your response concise and to the point. Do thorough research so when the risk emerges in your project, you are able to take immediate action.
Moreover, along with documenting the risk, you should also document the response plan as well as implementation strategies. If the process is long, then make a document and add its link to your risk register. This will allow the team to understand the action in a better manner.
Every risk is different in its nature and core impact. You have to figure out the ones you have to address immediately and the ones you can afford to ignore for the time being if you lack the time and resources. This is the stage where you will categorize the risk in three levels, including low, medium, and high. This way, you can filter the risk register and prioritize the ones that you should work to eliminate.
Thereafter, you need to assign an owner for every risk. If a dedicated team member is not addressing a potential risk, then you will never know it until the risk turns into a big issue. After completing the aforementioned steps, assign a team member for a specific risk. He or she will be responsible and accountable for that particular risk.
This way, you can ensure the teams are knowledgeable about the risks and how they can mitigate them. Lastly, there is a notes section on the risk register. Here you can add any important information that does not fit in the above category. This is a place where you can put valuable ideas so that they do not get lost in the constantly growing process of a particular project.
Managing risk in a timely manner can save your organization a considerable amount of time, effort, and money. The risk register is not merely a list of possible risks that a particular project can deal with. Instead, it includes all the information related to those risks, thereby making the team better prepared to deal with the risks and maintaining the efficiency of the project.