Risk Register

(OBJ 5.2)

Crucial for projects and business, it involves the identification and assessment of uncertainties that may impact objectives
The risk register is a key tool in risk management, featuring key risk indicators, risk owners, and risk thresholds

Records/documents identified risks, descriptions, impacts, likelihoods, and mitigation actions
Key tool in risk management
May resemble a heat map risk matrix
Facilitates communication and risk tracking
Key component of project and business operations

Risk Description
- Identifies and describes the risk
- Clear and concise description
- Goal: Understand the risk without requiring additional info.
Risk Impact
- Potential consequences of risk occurrence
- Rated on a scale (e.g., low, medium, high)
Risk Likelihood
- Probability of risk occurrence
- Rated on a scale (e.g., numerical or descriptive)
  - Example: "rare", "unlikely", 1-5
Risk Outcome
- Result of the risk if it occurs
- Related to impact and likelihood
- Helps understand the overall effect of the risk on the project
Risk Level or Threshold
- Determined by combining the impact and likelihood
- Prioritizes risks (e.g., high, medium, low)
Cost
- Financial impact on the project
  - Cost incur
  - Cost of mitigating the risk
- includes potential expenses if it occurs or the cost of risk mitigation

Risk Tolerance/Risk Acceptance
- An organization or individual’s willingness to deal with uncertainty in pursuit of their goals
- Maximum amount of risk they are willing to accept
- Acceptance without countermeasures
Risk Appetite
- Willingness to pursue or retain risk in order to achieve their strategic objectives
- Reflects the organizations approach towards risk taking
- Types
  - Expansionary
    - Organization is open to taking more risk in the hopes of achieving greater returns
  - Conservative
    - Implies that an organization favors less risk, even if it leads to lower returns
  - Neutral
    - Signifies a balance between risk and return

Predictive metrics signaling increasing risk exposure
- Serve as a barometer of risks or safety levels providing a forward-looking view of potential risk and are often associated with the organization's risk appetite
KRIs help organizations evaluate the impact and likelihood of risks, allowing proactive management to prevent their escalation
Provide early warning of potential risks
Tied to the organization's objectives
Used to monitor risk changes and take proactive steps
Example:
- In a banking institution, a KRI could be the number of loan defaults in a given period.
- A sudden increase in this KRI might indicate a higher risk of credit default