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The Risk Management Standard AS/NZS 4360
Risk identification is often seen as the heart of risk management, but as the diagram shows, it is not the first step in the process. To be able to recognise a risk it is necessary to know what is at risk. The first step in the standard process is to define the context of the risk assessment, which falls into two parts, one descriptive and the other creative.
To ensure that all significant risks are captured, it is necessary to know the objectives of the enterprise within which risks are to be managed. This is the descriptive part of the context analysis.
Where the enterprise is part of a larger organisation, it is common sense as well as good practice to understand the relationship between its objectives and those of the larger organisation. Checking the alignment between objectives at various levels in the organisation ensures that no important assumptions or unspoken objectives are ignored.
In addition to checking with the level above, an enterprise's objectives must be reconciled with those of any stakeholders who have a say in its operations. Stakeholder analysis can play an important part in demonstrating the integrity of the process, but it has a vital functional role too. If objectives are defined without reference to the concerns of individuals or groups with influence over the enterprise's operations, it is likely that issues will be left out which will disrupt the risk management process when they do eventually come to light. These may be stakeholders' objectives which could have been accommodated, or inevitable conflicts which could have been managed if they were addressed early enough.
Source: www.ucop.edu
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