FERM Ch8 Risk Identification Flashcards
List Risk Identification Tools
- SWOT analysis
- Risk check lists
- Risk prompt lists
- Risk taxonomy
- Risk trigger questions
- Case Studies
- Risk-focused process analysis
Describe SWOT Analysis
- *Strengths, Weaknesses, Opportunities, and Threats**
- Strengths and Weaknesses are internal to the organization
- Opportunities and Threats are external
- Strengths are important if you can take advantage of an opportunity or to counter a weakness
- Weaknesses are important if they expose you to a threat
Describe Risk Check Lists
- Lists of risks that you can use as a reference for identifying risks
- Two main sources:
1. Experiential Knowledge: a collection of information that a person or group has obtained through experience
2. Documented Knowledge: a collection of information or data that has been documented about a particular subject by some external source
Describe Risk Prompt Lists
- Identifies the various categories of risk that should be considered
- Used to prompt a broader and more specific range of risk to analyze
- Example: PEST (Political, Economic, Social, Technological)
List Risk Identifcation Techniques
- Brainstorming
- Independent group analysis
- Surveys
- Gap analysis
- Delphi technique
- Interviews
- Working groups
Describe Brainstorming
- A group discussion that gets a broad range of views/points
- Bad ideas are not censored, since they can trigger good suggestions
- The facilitator will create a detailed list of risks and organize them into appropriate groups
List Disadvantages of Brainstorming
- Potential for free riders
- All participants need to be gathered in a single location
- Participants’ ideas may be influenced by prior contributions (convergent thinking)
- Lack of completeness
Describe Independent Group Analysis
- All participants write down in silence, and without collaboration, ideas on which risks may arise
- The facilitator will aggregate the ideas and then lead a discussion
- Each risk gets defended by the person who proposed the risk
- The risks are ranked independently and anonymously
- This technique avoids convergent thinking
Disadvantage of Independent Group Analysis
Disadvantage: If there isn’t balance in the group, then the results will be biased
List Disadvantages of Surveys
- The responses can be heavily influenced by how the questions are asked (framing)
- People may not respond to the survey Ñ Can lead to misleading results and bias
- Free text responses can be hard to analyze
Describe Gap Analysis
A type of survey that asks to to identify both the desired and actual levels of risk
exposure
- Senior management may have strong views on the desired levels of risk
exposures
- Junior employees will have clearer ideas of the actual levels of risk that the firm is
exposed
Describe the Delphi Technique
Another type of survey where acknowledged experts are asked to comment on risks
- Start by sending out an initial survey
- This is followed by subsequent surveys
- Process continues until there is a consensus on the risks faced
List Advantages and Disadvantages of Interviews
- *Advantages:**
- Structure and independence
- If an answer is unclear, you can get clarification immediately
- *Disadvantages:**
- Potential framing of the questions
- Long time to carry out the interviews
- Several interviewers might be used
Describe Working Groups
- These are used after a risk has been identified to further investigate the exact nature of the risk
- Comprised of a small number of individuals who are familiar with the risk
- They can discover additional details about the risks
Describe a Risk Register
- Put risks into a risk register once they have been identified
- This is a central document that details all of the risks faced by the organization
- Should be a live document; update it constantly to:
- Reflect the changing nature of risks
- Reflect on the evolving environment that your organization operates in
