Business Insights

Preparing your risk register for the upcoming year

January 16, 2023

Identifying, evaluating, prioritizing, and managing risk is an important component of every successful risk management process. For most HR departments, this process constantly repeats and provides information about company operations risks and how to mitigate the situation.

But as an HR manager, how and where do you store the risk data so your organization can use it to prepare for more risk next year? That is where “preparing a risk register” comes in handy. Building a risk register for your business helps reduce potential HR project delays.

What is a risk register

A risk register is a risk management tool your business can use to record and track possible risks within a project. It is also known as a risk register log and is a document that helps to identify, assess, prioritize, and solve risks before they become obstacles.

An effective risk register contains detailed information about the threats that pose risks to your project. Thus, if the risk manifests as a larger threat, your team will be prepared to solve the issues before it escalates.

The benefits of building a risk register

A risk log is a must-have in all businesses, as it provides an overview of all potential risks and possible ways to mitigate them.

One of the greatest benefits of a risk register is that it enables you to manage risks more strategically. You’ll identify what might go wrong and its effect on your organization. It will also help you to channel your company’s resources into the areas with the greatest risks.

A risk register also helps you to identify risk patterns and be prepared to handle any risk that might occur in the future. Having a risk register at hand will give your business leaders more confidence in what decisions they make and will guide them on where and how to spend and why.

Where to start with a risk register

A risk register is built during the early stages of a project. To begin, consider any of the numerous risk log templates available online. Your team’s risk register will likely differ from others as you’ll have specific risks associated with your projects.

However, most risk log templates include the following fields.

Risk Identification
Risk description
Risk category
Risk probability
Risk analysis
Risk mitigation
Risk priority
Risk owner
Risk status

Based on the above elements, here are the steps needed to prepare a risk register.

Identify risks

The first and most important step to preparing a risk register is to gather information about existing and potential risks (Risk Identification). You can use a risk name or identification number to identify the risk. You can also include the date of the risk identification. Identifying risks helps you to make better decisions on any future risks.

Describe project risks and categorize them

After identifying the risk, the next step is to explain each (Risk Description). Your risk description should include a brief yet thorough overview of the risk and why the risk is a potential issue. It should be easy for anyone on the team to understand.

For example, ‘malware’ might sound less serious. But “software security bridges could cause significant data loss and brand damage” is clear and persuasive.

Once you describe the risk, determine what risk category (Risk Categorization) each risk falls under and assign risk owners. Some categories include compliance risk, budgetary risk, security risk, operational risk, and more. The more you organize risks, the simpler it is to find and access them later.

State the risk likelihood and impact

Here you’ll determine how likely a risk will happen (Risk Probability) and how each risk could impact your business (Risk Analysis). Having this knowledge helps you to establish a strategy to handle those risks.

You can determine risk likelihood via qualitative measurements such as “most likely,” likely, or not likely or quantitative measurements like calculated percentages. For risk analysis, you can use the qualitative scale of “very low” to “very high” or a quantitative scale.

Develop a risk response plan

The next step is how to respond to the risks you’ve identified, explained, and analyzed (Risk Mitigation). Your risk response should include a detailed solution on how to reduce the risk, a short description of the intended outcome, and how the plan will affect the risk impact. But ensure it’s clear, concise, thorough, and not excessive.

Prioritize project risks

All threats do not pose the same level of risk. Some risks will have higher impacts than others, so you’ll have to decide what risks should be at the top or bottom. Risk prioritization will enable you to determine better the risk that poses the greatest impacts and prioritize mitigation. Gauge the priority of a risk by using both the risk probability and risk analysis in step 3. You can use a scale such as high, medium, or low.

Assign risk owners and state the status of the risk

You need to assign an individual in your organization to own each risk you’ve identified (Risk Owner). Ensure you select someone who is up for the task. The person must be able to mitigate the risk and be responsible for mitigating it anytime it comes.

The ‘Risk Status’ is the last field to include in your risk log. It helps you to know whether a risk has been successfully mitigated. You can record the risk status field as open, in progress, or closed.

Conclusion

Of course, you can only foresee some of the risk events that could arise in a project. But by preparing a risk register, you’ll be ready to respond fast before project risks become real issues and affect the entire project.