Risk management is a crucial aspect of any business or project, as it allows for the identification of uncertainties that can affect objectives and the implementation of measures to mitigate or avoid them. However, to effectively manage risks, it is important to define them correctly.
Let's take the analogy of an airplane trip. Before takeoff, the pilot examines the weather conditions, available fuel, quality of the runway, possible flight routes, and estimated flight times. All of these variables represent uncertainties that can affect the safety and success of the flight. As a result, the pilot must frame each uncertainty and determine how it can affect the flight. For example, if the runway is too short, this could prevent the plane from taking off.
Similarly, when identifying and evaluating risks in a business or project, it is important to frame each risk. This involves describing where the uncertainty lies, what potential impacts it could have on the business or project, and clearly distinguishing the causes, risk, and effects.
To define a risk, it is useful to follow a structure that details the cause of the risk, the risk itself, and the effects of the risk.
For example, for the risk of a cyber attack, the structure could be as follows:
The company uses internet-connected computer systems to store confidential information.
It is possible that a hacker could exploit a security vulnerability to access and steal or corrupt this information.
This could lead to a loss of customer trust, legal action, and revenue loss.
A useful formulation to help define a risk is: "Because (cause of risk) ... then it is possible that (the risk) ... which would cause (effects of the risk) ...".
In summary, defining a risk is a crucial step in risk management, as it allows for the framing of each uncertainty, identification of potential impacts on the business or project, and clear distinction of causes, risks, and effects. With a clear structure, it is possible to better understand risks and take measures to mitigate or avoid them.
The use of internet-connected computer systems to store confidential information is a potential cause of cyber attack risk. The widespread use of the internet and computer systems has made it easier for cybercriminals to exploit security vulnerabilities in organizations' IT systems.
The risk associated with this cause is that a hacker could exploit a security vulnerability in the company's computer systems, gain unauthorized access to the confidential information.
The effects of such an attack are profound and long-lasting. A breach of confidential information could result in the loss of customer trust, and this can have significant implications for an organization's brand reputation. Additionally, a data breach may lead to legal action against the organization, which can result in fines and legal costs. Furthermore, the financial implications of a cyber-attack can be significant, ranging from direct financial losses due to theft of assets or funds to indirect losses due to decreased sales and revenue. Ultimately, the effects of a cyber-attack on an organization can be far-reaching and long-lasting, making it imperative for organizations to prioritize cybersecurity to protect against these risks.
