Risks and threats

 There is no terror, Cassius, in your threats; for I am armed so strong in honesty that they pass by me as the idle wind. William Shakespeare (Julius Caesar)

A risk is the possibility of harm coming to the organization by the action of a person, group or set of circumstances. It is usually not predetermined and is unpredictable and unforeseen. It can generally be insured against (a building catching fire, a key executive becoming ill, a bad debt, bad weather at a major outdoor event or a key supplier going out of business). There are usually no ulterior motives behind risks. A threat is a declared or implied intention to inflict harm or a strong possibility that harm will occur. Threats are more difficult, or impossible to insure against. They are often accompanied by demands (a strike by workers for more pay, action by animal rights activists to force a laboratory to close or cancellation of a large contract to obtain a price reduction).

Reducing the risk: While many risks can be insured against, the biggest exposure is often those that it is difficult to get protection for, such as loss of reputation, changes in the law, or products becoming out-of-date. Awareness of risk and acceptance of responsibility need to be part of the thinking of both managers and staff. There should be a culture of risk avoidance - electrical cables not left exposed, fire exits not obstructed, people not driving long distances when tired, etc. Management should review the effectiveness of standards and controls concerned with the management of risk and appoint a person or group with this responsibility. Indeed, UK corporate governance rules require this review to be done periodically.

Some typical risks: Organizations suffer continual risks from key people being ill or involved in accidents. An executive who drives 30,000 miles a year has a similar risk to being involved in an accident as a construction worker, but organizations rarely acknowledge this fact. Systems integrator ICL found that after putting its drivers through an advanced driving course, accidents were reduced and when they did occur they were less severe and fewer days were spent recovering. One of the biggest risks that organizations face is loss of information. A survey showed that if a business lost all its information by a computer crash and was unable to recover the data, it only had a 25 per cent chance of surviving. The increase in legislation is having an effect with claims regarding unfair dismissal, sexual or racial discrimination, workplace accidents and stress related illness. >>>