It is true that in many cases, taking risks is the first step to achieving great accomplishments, but in the corporate world, it is prudent to act with caution, after all, some risks can significantly compromise the sustainability of your business.

If every project involves some kind of obstacle, it's important that every company that wishes to be successful seeks to perform a correct risk management to protect your business. For this, there are some methodologies that help in identifying risks, so that it is possible to outline effective actions to overcome them.

The four methodologies we will present below have been effective in different types of organizations, so you just need to know their characteristics and identify which method is most suitable for your company's profile and needs. Check it out!

1- Preliminary Risk Analysis

The Annual Percentage Rate it is a well-known technique, especially in the area of occupational health and safety, being one of the most used today, thanks to its high effectiveness. This is a tool that aims to identify potential risks in a work environment, whether they are elements or environmental factors that could represent danger.

The Preliminary Risk Analysis It's a type of protocol that serves to prevent workplace accidents, where actions are pointed out to minimize the possibility of these accidents occurring.

The APR includes descriptions of the activity to be performed, the number of professionals involved, and what equipment needs to be used, in addition to the actions that should be performed routinely during the execution of the activity.

In summary, the following information can be found in the PRA: the risk, its probable cause, its possible impact, and the necessary preventive controls. This information is then evaluated by those responsible for risk management, who only authorize the activities to proceed when they conclude that the risk has been mitigated.

2- SWOT Analysis

The acronym SWOT comes from the words Strengths, Weaknesses, Opportunities, and Threats. That's why today it's possible to find the same methodology with the acronym FOFA, because the translation would be Strengths, Opportunities, Weaknesses, and Threats.

This technique has been widely used in strategic planning for organizations, but also in risk planning, indicating what needs to be analyzed. Detailing the points, we have:

• Forces: In this question, the main differentiating factors and competitive advantages of the business should be listed, that is, what can minimize impacts or prevent risks, reducing the probability of problems and accidents.
• WeaknessesThis is the time to list the immediate opposite of the previous item, the project's shortcomings, which are those factors that can increase the chances of risks materializing, ranging from environmental, political, or economic context reasons, to problems with the team or equipment.
• OpportunitiesThis is where possibilities for mitigating risks are considered, according to the company's ability to reduce impacts on the project through improvements in its processes, whether internal or external. It is worth remembering that the improvements are potential, meaning that the results may not be exactly as imagined.
• ThreatsChanges in tax legislation or increased competition are some examples of project threats, so in this section, you should list what could be an obstacle to the business's success.

The idea behind the SWOT methodology is for the company to work in a way that increases strengths to achieve opportunities and reduces weaknesses to avoid threats, through data that is measurable and real, and can be constantly monitored.

Probability Axis

Measuring the likelihood that a problem will occur is one of the main tasks of management of risks. However, it is essential to understand that it is not enough to assess a risk in isolation, but rather to combine and compare it with others, and, if necessary, to choose which ones require more attention.

Also called risk matrix, probability axis This is used to represent potential risks in a table with 2 axes, where one indicates the probability of problems occurring and the other indicates information about the impacts the risk may cause.

The scale of these two axes contains: for the first, very little possible; little possible; possible; very possible; extremely possible; and for the second, no impact; little impact; moderate impact; high impact; very high impact.

When combining this information, it's possible to find, for example, an extremely possible risk with a very high impact, which means immediate intervention is needed. On the other hand, a very unlikely risk with a moderate impact can wait for preventive actions to be taken.

The methodology allows for the establishment of a kind of priority ranking, enabling managers to define what actions should be taken and with what level of urgency for each item.

4- Risk Breakdown Structure

The Ear It serves to classify and define the level of each risk, based on the framework of each action and its potential risks within certain definitions. The first step consists of dividing potential problems into external risks and internal risks. To do this, it is necessary to understand the origin and context of each risk.

In the external risks quadrant, we can find, for example, problems with suppliers, labor, competition, and market legislation and regulation. Global factors such as public opinion and stakeholder groups in the business are also included.

In the second quadrant, internal risks, there are the following subdivisions:

• Projectspecific difficulties of project, such as resources, deadlines, team, and communication between stakeholders.
• Organizationalbudgetary problems, financing, managerial procedures, chains of command, and pressure from franchisees and shareholders.
• TechnicianTeam performance, available infrastructure, and technology changes.
• Commercialproblems with raw material suppliers and contracts.
• Legalproblems with unions, contracts, and warranties for defective products or improperly performed services.

Regardless of the methodology chosen, it is essential that risk management determines actions (which require planning and monitoring). It is fundamental to assess the reduction of problems as risks are mitigated and to monitor the impacts caused by realized problems.

Furthermore, it's important to highlight that a risk manager should not work alone; the entire company needs to be involved in the task of eliminating potential problems and adopting safe behaviors to enhance a project's positive outcomes.

If this content was useful to you, be sure to read our article that teaches how to improve your company's management in 7 steps.