December 2017
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The Interconnected-ness of Risk

How do you manage risks across functions and boundaries?

Risk management is a complicated business and many things make it harder. It is one thing, for example, to identify individual risks and another detect their relation to and effect upon other risks. The more variables there are, the harder it gets.

Well-managed risks that have been analysed correctly and managed effectively – by either reducing their likelihood of occurring or mitigating the effects of an occurrence – can turn into giant-killers when combined with a risk for a different field. It can be even harder still, when the risks are within the organization.

These combinations can be as hard to predict, as they are to manage – and one of the reasons is human. Managers seldom press other managers on the subject of risk. The same managers that watch deliverables like hawks often accept their peers’ risk evaluations without question – and without questioning the links to and effects upon their own risks.

One way to manage the “interconnected-ness of risk” is for managers to look at their relationships to other parts of their organizations and examine their partners’ risks for potential effects on their own operations. This process – and the resulting conclusions – can be uncomfortable.

Confronting inter-organization risks is hard. It can especially uncomfortable if the partner does not agree that there is a potential problem. These conflicts must be faced, however, for while risks can be accepted, reduced or mitigated, they should never be ignored.

 

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