A critical component of risk management plans is monitoring systems. The definition of risk included an undesirable or negative event for the organization. After completing the steps to identify risks, their probabilities and their negative outcome, organizations need to develop plans to manage and monitor potential risks.
Many organizations identify potential risks and develop management plans, but are not able to develop adequate monitoring systems. Systems should be established for the timely and accurate monitoring and presentation of development risks, which will allow management to take appropriate actions to reduce, eliminate or mitigate their consequences. Creating a system of management indicators that provides accurate, timely and relevant information in a clear, understandable way is the key to risk monitoring.
Let's look at the four main components of effective risk monitoring systems.
1. Risk monitoring is a continuous process for systematically tracking and evaluating the effectiveness of risk management actions against established indicators. It should also include the results of periodic revaluations to assess both known and new risks. If necessary, managers should review approaches to assessing risk for effectiveness in conducting evaluations.
2. Information must be available for sufficient time for management to take corrective action. Effective monitoring work provides information to show whether treatment actions are working and what risks are on the way to actual problems.
3. The management needs to identify specific indicators to be monitored and information to be collected, compiled and communicated. As a rule, documentation procedures are developed as part of risk management planning. Specific procedures and details of risk reporting should be included in risk management plans.
4. In order to ensure effective monitoring of significant risks, integrated planning and program planning should take into account actions related to specific events, schedules and success criteria developed in previous management phases. Identifying these actions and processing events in the context of their occurrence establishes a link between them and the specific actions that the organization is trying to perform, which makes it easier to determine the impact of actions on cost, schedule and performance. Detailed information on risk management actions and events should be contained in the risk management documentation (both formal and informal). Using an electronic online database that stores and allows you to obtain information related to risk is practically necessary for effective risk monitoring.
Effective risk management plans require fully integrated monitoring systems that include systematic processes and specific actions to monitor and manage risks. This allows the manager to take timely and effective measures to reduce, eliminate or mitigate the effects of negative results that represent risks.
