ERMA New Zealand has identified that risks are made up of two elements:
- the likelihood of something happening and
- the magnitude of the consequences if it did.
Risk Management is a well-established field of professional expertise. It is used in a wide range of areas including: engineering, business and finance, health and safety, environmental management, healthcare, emergency management, business continuity management, sport and recreation etc.
Risk Management has been described as 'all the things you need to do to manage an uncertain future'. In most cases risks are taken so as to achieve some advantage, and managing risks is associated with making decisions.
Standards New Zealand and Standards Australia have published a joint risk management standard (AS/NZS 4360: 1999 Risk Management). It defines risk management as "the culture, processes and structures which are directed towards the effective management of potential opportunities and adverse effects."
The risk management process is defined as "the systematic application of management policies, procedures and practices to the tasks of establishing the context, identifying, analysing, evaluating, treating, monitoring and communicating risk."
The Risk Management process is outlined in this diagram below (links to larger version):
If you want to find out more about the professional field of Risk Management in New Zealand, see the New Zealand Society for Risk Management link on this site. There is also a Public Sector Liaison Group that meets in Wellington about three times a year. To find out more about these, contact the coordinator Janet Gough - janet.gough@ermanz.govt.nz