A common risk language can be created by benchmarking the traditional risk programs to the international definition of uncertainty risk. This allows different disciplines, units, and geographies with distinct risk profiles to address the unique risks faced by including them in the context description. Risks common to all units in an organization are handled in a strategic fashion. Risks unique to individual organizational units drive the unit-specific risk responses. It is important to realize that the International definition of risk is a high-level definition. It does not seek to preclude those definitions of the other units that use traditional risk!
Some people advise against using the term, risk! There are so many other terms that are used: peril, loss, hazard, threat, harm, danger, difficulty, issue, obstacle, problem, luck, fortune, accident, possibility, chance, probability, likelihood, uncertainty, consequence, Impact, outcome, level, event, occurrence, vulnerability, exposure, benefit, advantage, opportunity, windfall, prospect, and so forth. Even more reason to have a common risk language! There are practitioners that sill reject the international risk language! However, they often do not recognize that these other words also have a likelihood of misunderstanding when there is communication about risk.
It is important to avoid typologies of the areas of risk. It is more important to focus on understanding the fundamental processes driving uncertainty – hence risk – in organizations. Systems of management, organizational structure, people management, organizational culture, power, and conflict all have profound implications for organizational risk and uncertainty. The PESTLE analysis is helpful when conducted in the determination of the organization’s context. This helps an organization identify the uncertainty.
To be effective, risk needs to be regarded as important to the organization’s strategic planning, management, and decision-making process. It is important to consider an organization’s operating environment and determine how to integrate risk management with its governance.
The leading edge of risk management practice is addressing the management of uncertainty. This goes beyond perceived threats, opportunities, and their implications. Risk management is about identifying and managing all the many sources of uncertainty that can give rise to and shape the perceptions of threats and opportunities. Uncertainty management implies exploring and understanding the origins of uncertainty before seeking to manage it. There can be no preconceptions about what is desirable or undesirable. Key concerns involve the understanding of where and why uncertainty is important in each context, and where it is not important.
Dr. Bob Pojasek
Sustainability Legend | ESG Reporting & Disclosures | Uncertainty Risk | Pollution Prevention Expert | Process Improvement | Organizational Sustainability Reporting | Sustainable Procurement Professor
Chairman, Education and Research Executive Board (EREB)
VCARE Academy Inc.
Managing Director
Center for Corporate Performance & Sustainability
📩 rpojasek@sprynet.com
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