In this lesson,
we will cover risk monitoring and reporting.
Among the various components of risk management,
risk monitoring and reporting play a crucial role.
The final step of risk management process
is risk monitoring and risk reporting.
So what is risk monitoring?
Risk monitoring is the process of tracking
and identifying risks, monitoring residual risks,
identifying new risks, executing risk response plans
and evaluating their effectiveness
throughout the project lifecycle.
It involves regular tracking and reviewing of risk
and the effectiveness of risk response actions.
For example, a software developments company
might monitor risk related to a project deadline,
software bugs, or changes in market demand.
The company might use project management software
to track these risks, regularly reviewing the software
to identify any changes in the risk landscape.
Ongoing risk monitoring can also help us
determine residual risk and control risk.
A residual risk is the likelihood
and impact after specific mitigation, transference,
or acceptance measures have been applied
to the inherent risk.
A control risk, on the other hand,
it's a measure of how much less effective
a security control has become over time.
For instance, consider antivirus software
that was initially very good at finding malware
using specific identifiers known as signatures.
However, as hackers begin to hide their code,
the antivirus became less successful over time.
Next, let's discuss risk reporting.
Risk reporting is the process of communicating information
about risk management activities,
including the results of risk identification,
assessment, response, and monitoring
to the stakeholders of the project or business.
This information is often presented
in the form of a risk report.
For instance, a construction company might produce
a monthly risk report that includes information
about potential safety hazards,
the likelihood of project delays,
and the potential financial impact of these risks.
This report would be shared with project managers,
company executives, and potentially the client
to keep them informed about the risk landscape
and the actions being taken to manage these risks.
Risk monitoring and reporting are essential
for several reasons, including informed decision making,
risk mitigation, stakeholder communication,
and regulatory compliance.
First, we have informed decision making.
Regular risk monitoring and reporting
provide valuable information that can be used
to make informed decisions about resource allocation,
project timelines, and strategic direction.
Second, we have risk mitigation.
By continuously monitoring risk,
businesses can identify when a risk is becoming more likely
or when potential impact is increasing.
This allows them to take action to mitigate the risk
before it becomes a problem.
Third, we have the stakeholder communication piece.
Risk reporting is a critical tool
for communicating with stakeholders.
It helps to manage expectations
and to demonstrate that risk are being effectively managed.
Fourth, we have regulatory compliance.
In many industries,
risk reporting is a regulatory requirement.
Regular risk reports help to demonstrate compliance
with these regulations.
So remember, risk monitoring is an ongoing process
of tracking and reviewing identified risks,
as well as the effectiveness of measures taken
to mitigate them.
It helps in detecting any changes
in the risk landscape over time,
while risk reporting refers
to the communication of information
about risk management activities to stakeholders.
It typically involves presenting data on identified risks,
their potential impact,
and the action taken to manage them,
often in the form of a risk report.
Whether you're running a small business
or managing a large project,
effective risk monitoring and reporting should be a key part
of your risk management strategy.