Ensuring the organization is aware of the risks and issues that significantly impact success is paramount to an effective strategy. Organizations can never predict all risk with certainty, but a simple and streamlined risk assessment process can help predict the uncertainties and direct mitigation to minimize the impact to the overall strategic plan.
Project Management Institute defines the risk management process as the “systematic process of identifying, analyzing, and responding to risks.”
By identifying risk and prioritizing the mitigation of risk impact across the strategic plan, risk management helps improve strategic outcomes. Risk management helps organizations understand the importance of each element of risk so they can escalate decision making to leadership in order to make more informed decisions. When analyzing the potential impact of strategic initiative risk, it is necessary to understand the impact a given risk may have on the broader strategic plan as well as the potential impact on meeting strategic objective target measures. Risk management allows the organization to consider the impact of individual initiative risks and develop mitigation plans based upon the overall impact to the strategic plan, not just the initiative.
Common risks such as resource allocation tend to impact multiple initiatives simultaneously and makes prioritization difficult. Therefore, understanding the individual impact to the overall plan can enable decision makers with the tools to prioritize individual initiative risk mitigation plans. This reduces the conflict between initiatives competing for resources and focuses organizational resources on the most important activities. Implementing effective risk assessment and management across the strategic plan greatly improves the probability of successful strategic outcomes.