Posted: December 15th, 2015 11:11am UTC

Is there a risk of over-managing risk?

When it comes to risk management, balance is essential. After all, all businesses are inherently risky – and if an organisation never took any risks at all, it wouldn’t grow (and would probably dissolve quickly).

Similarly, risk is inherent in local government. Local authorities need to develop their risk tolerance, particularly as services are increasingly being devolved to communities, while budgets are being cut. Although risk certainly needs to be managed, a distinction must also be made between risk avoidance and risk management.

The problem with playgrounds

A recent report published by Baroness Floella Benjamin warned that children’s playgrounds have become “too safe”.

According to the research, most modern playgrounds with “fencing, rubber flooring and bright colours” are not challenging or exciting enough for youngsters, and the over-sanitised environments don’t allow children to learn important lessons about self-confidence or taking risks.

While the headlines grabbed attention by quoting a line in the report, which stated that kids should be encouraged to play near cliffs and water, the point being made is that children should be encouraged to play outside more. This, would teach kids to challenge themselves, take calculated risks and enjoy a sense of excitement. It could also help to tackle the obesity epidemic and fostering a more holistic approach to their wellbeing and development.

Former MP Helen Clark was the lead author of the report. She explained: “We are calling for a ‘whole child’ approach so play and physical exercise shouldn’t be looked at in isolation. In China, children do better if play time is factored in within the school curriculum and academic results are improving as a result of that.”

However, it’s also understandable that local authorities and schools want to decrease any potential risk for injury in places where children play. Sand pits – once commonly found in play areas – have been replaced by bouncy rubber. It may be softer to land on and more hygienic, but now the only place for a kid to build a sand castle is the beach.

Of course, nobody wants to see a child get hurt – health and safety is a serious concern – but are some lessons about managing personal risk no longer being taught?

Finding the balance

Back in the adult world, organisations have similar lessons to learn about managing risk – avoiding all threats entirely is not realistic and, even if it were possible, would likely lead to stagnation. Meanwhile, inadequate risk management could result in an array of negative outcomes.

As with the playground example, the key is to find a balance – but how do you achieve that? Here are some suggestions:

Carry out a risk assessment

A thorough risk assessment isn’t just a list of potential risks, it’s also analysis of each potential threat, including who or what might be harmed and how. When carrying out a risk assessment, you need to identify each hazard and determine how it can be eliminated or controlled.

Score risks

Putting a numerical value on risks can help you to view threats in a more objective manner. Risk scoring will often involve two numbers – a measure of a particular threat’s impact and its likelihood.

Re-evaluate regularly

The world is constantly changing and something that may have been a low risk a few weeks ago could be a much bigger concern today. That’s why re-evaluating your risk assessment and scoring on a regular basis is a must. This will also give you an opportunity to identify new risks.

Risk is not uncertainty

Dr David Hillson is an expert in risk management. He warns that risk managers should be careful to avoid confusing risk with uncertainty.

He says the key is to realise that risk can only be defined in relation to objectives. “The simplest definition of risk is ‘uncertainty that matters’, and it matters because it can affect one ore more objectives,” he explains, adding that risk cannot exist in a vacuum and we also need to define what is at risk.

Consider both risks and opportunities

While risk management tends to focus on negative outcomes, one way to help maintain a balance is to also consider risks with potential positive results – also known as opportunities.

Martin Swillig, founder and CEO of Startup Professionals, explains that the first step in balancing risk and opportunity is to adopt “a winner’s mindset, and not become a prisoner of hope”. Then, he says, you need to embrace risk, rather than fight it – and this is what gives you the “real” advantage.

Bedford Council

As time goes on, government policies will continue to change and local governments will have to deal with ongoing challenges like new responsibilities and decreased budgets. With this in mind, there is clear need for innovation in local government and new approaches will need to be subjected to risk management as part of the decision making policy.

In order to assess these new risks effectively, local authorities must ensure adequate risk management strategies are in place. That means systems that provide the right balance of risk and opportunity management, without trying to avoid risk all together.

Bedford Council, explains on its website that it uses six key questions to identify risks. These are:

  • What do you want to achieve, what will stop it being achieved?
  • What is the potential cost to time, money and performance?
  • How likely is it to happen?
  • What are the impacts of each risk?
  • What is the source of the risk?
  • What can be done to reduce or control the risk?

In addition, the council uses JCAD’s risk register to effectively identify, prioritise, manage and monitor risks for a specific directorate, service, project or partnership.

The register comprises a scoring system and it is monitored and reviewed on a regular basis to identify any changes to risk profiles and review the effectiveness of controls and actions.

What’s more, the risk register helps the council to:

  • Identify managed and unmanaged risks
  • Take a systematic approach to managing risks
  • Implement effective and efficient controls
  • Identify responsibilities
  • Identify risks at the planning stage
  • Monitor risks
  • Focus on objectives.

Dedicated software, such as JCAD CORE, has been designed to help organisations improve risk management. This intuitive and highly functional software is fully scalable and is suitable for use in both the public and commercial sectors.

To learn more about the how JCAD CORE can be implemented to help local governments manage risk, contact us today.

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