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Risk Management: Risk vs. Issue

Risk Management: Risk vs. Issue

Friday 18, 10 2019
Both risk management and issue management are important determinants of a successful business. The business analyst plays a crucial role in both activities.
Risk management is a common term in the business field. A business can only be successful if risk management is carefully implemented. However, the concept of “risk” is likely to be mistaken for that of “issue”, which may negatively affect how a business perceives and manages risks. 

The primary differences between a risk and an issue are whether it has occurred and, consequently, what solution should be made.

Risk

A risk is something having the potential to endanger the efficacy and effectiveness of a business. In other words, a risk is something that has not happened yet. 

According to the Business Analysis Body of Knowledge (BABOK), a risk is “the effect of uncertainty on the value of a change, a solution, or the enterprises.” Risks appear whenever either a change or a decision is to be made. Changes, obviously, tend to lead to unexpected risks. Risks exist both inside and outside the system which is going through changes. To illustrate, systematic changes in product prices are likely to affect the market and consumers.

Possible business risks include:
  • Strategic risks which negatively affect the organization’s strategic business plans
  • Systemic risks which interfere in the software solution
  • Process risks which impede your everyday business work
  • Compliance risks which violate legal regulations
  • Security risks which threaten network and data assets management
  • Financial risks which drain the fund of your organization

Risk management

Risks are the central focus of business analysis since they are potentially dangerous to the business. A business analyst is expected to identify risks circulating a project’s life cycle and present them to the project manager. A risk log is required to keep track of risk management activities. The risk log can be kept either by the business analyst or the project manager.

A risk log address the following questions:
  • How likely will the risk take place?
  • How serious is the risk if it takes place?
  • What should be done to either prevent or act upon the risk, in other words, what mitigation strategy should be applied?
  • Who is accountable for risk management and the mitigation strategy?
Issues
Unlike risks, which are things expected to occur, an issue is understood as a risk that has actually occurred. Issues are also created through continuous unresolved conflicts, particularly, in the beginning, stage of a business. Unresolved issues, if not eliminated soon, would unavoidably result in new risks.  

Notably, in contrast to the common belief that an issue necessarily is born out of a risk, an issue sometimes suddenly appear. A business analyst is required to readily work out an issue even when it is not expected.

Issue management

As soon as an issue is identified, it must be addressed and resolved timely. Similar to the aforementioned risk management procedure, either the business analyst or the project manager keep an issue log which comprises of:
  • A description of the issue
  • The seriousness level of the issue
  • The priority of resolving the issue compared to other issues
  • A description of the strategy/plan
  • The person/team who is in charge of issue management
The business analyst plays a crucial role in issue management, including identifying and dealing with the issue. Fail in issue management would inevitably impair the business.
 Compiled by Hayley - Vietnam Credit
 
Categories
Risk Management

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