Why Implement Risk-Based Thinking?
In every business and every industry, there are significant risks to the health and success of the business. Risk can be defined as the “effect of uncertainty on objectives” and which needs to be managed by certain processes to ensure optimal functioning. Risk-based thinking refers to a management process that measures operational efficiency and is based on something we do automatically and often sub-consciously.
Risk management is a tool that helps companies evaluate risks in processes and content and can assist business owners in ensuring that these risks are highlighted and managed in a controlled environment. This type of assessment replaces a “gut-sense” approach with a more guided decision-making approach and is easily understood by individuals not directly involved in the process.
A critical qualification needs to be made, in that risk assessment is a tool, not the solution to a problem. Risk-based thinking is a valuable tool as it can:
- Allow pro-active management
- Improve productivity
- Create preventative action
- Improve customer confidence and satisfaction downstream
- Establish a proactive culture of prevention and improvement
- Assure the consistency of quality of goods and services
- Maintain a culture of improvement throughout the organisation
Risk-based thinking is part of the process approach and makes preventative action part of the routine. It enables companies to assess potential hazards and their probabilities, acting proactively to create strategies to manage or negate these risks and thereby reduce or avoid the adverse outcomes of these threats. It is important to note that risks are not only limited to negative possibilities, as companies can also use the theory of risk-based thinking to pinpoint opportunities
ISO 9001:2015, ISO 27001 and ISO 31000 are useful tools when tackling risk-management in your firm. Each offers various perspectives on risk management concepts. The primary purpose of ISO 9001 is to set out requirements for Quality Management Systems, for ISO 27001 it is Information Security Management, and ISO 31000 offers principles and guidelines for Risk Management.
If you would like to know more about managing risks for your business, contact DQS today.