What is a Risk Register, and why is it important?
Running a business is full of surprises. Unexpected events can pop up at any time, potentially leading to the derailment of your organization’s goals. If everything suddenly went haywire, would you and your team know what to do in the heat of the moment?
That’s precisely why having a robust risk management program is crucial, and it all starts with a risk register – a tool used to identify and mitigate potential problems. It’s always a good idea to have a risk register, but depending on the project, it may also be required in order to meet compliance regulations.
How to Start Creating a Risk Register Template
One of the reasons why people find risk registers to be daunting is because they often start with a spreadsheet that requires a ton of manual work. Fortunately, we’ve created the next generation of risk registers, and we’ve created this step by step guide for those just getting started with risk management.
Friendly Tip: We understand that creating a risk register can be tricky for those who haven’t done it before, so in addition to our guide, we’ll leave this downloadable risk register template here as well. Scroll down the page and hit “Risk Register Template” to access yours.
Information a Risk Register Template Should Include
While the composition of a risk register may differ based on the specific organization and project scope, there are some essential components that should be present. This includes:
- Risk Category: The type of risk
- Risk Name: A brief description of the risk so that people can easily understand what risk you are assessing.
- Impact: Description of the potential impacts should the risk occur, ideally in business terms. Decide whether to use “worst case” or “anticipated” impacts and be consistent. Consistency is especially important as the risk register gets larger and more people get involved in the assessments.
- Impact Rating or Score: The product of the probability and impact values, or in other words, the untreated / inherent level of risk.
- Treatment: Description of how the risk is to be treated. This is often a written statement detailing the plan of action
- Treatment Status: To what extent is the planned treatment in place? 0% means the treatment is only a plan at present – nothing has been done about it yet. 100% means that the treatment is fully operational.
- Residual Risk: This is the risk rating today, given the implementation status, anticipated probability, and impact values when fully completed.
- Target Rating: Also referred to as post treatment risk rating, this is the product of the anticipated probability and impact values once the risk treatment is fully implemented.
Although each identified risk should have an owner specified in your risk register, the overall responsibility of owning the register usually lies with project managers or stakeholders. This ensures that all risk-related information is centrally stored and easily accessible. While some organizations may hire risk management professionals to handle their risk register, it is typically the duty of the project manager or team leader to manage it.
Filling out a Risk Register Template in 6 Steps
Regardless of which approach you decide to take, you’ll need to set aside some time, gather your team, and conduct a brainstorming session in order to:
- Identify the risks
- Describe the risks
- Estimate the risks
- Mitigate the risks
- Assign the Risks
- Monitor the Risks
You’ll find that each step will naturally cover a key component from the previous section, so don’t feel like you have to juggle tons of information while going through the process. It’ll be easier than you think.
Friendly Tip: The goal is to simply provide information about potential risks. Avoid getting bogged down in the specifics. Select the only fields that you believe are essential to effectively communicate the maxim amount of information regarding any potential risks to your project or business.
Now, let’s get into it.
Identify the Risks
If a project deviates for any reason, realize that that will impact the company’s overall roadmap, budget, and success. This is why it’s important to set aside time with the team members that will be most involved in the project, as well as stakeholders, and have everyone conduct a thorough risk assessment. A risk assessment involves identifying potential hazards, vulnerabilities, and threats.
Each member of your team will be a key player in the success of your project because they’ll be responsible for different aspects. Be sure to rely on their expertise in order to best identify potential risks.
Describe the Risks
After you and your team have identified potential risks, the next step is to take a closer look at each one and provide a brief description. Be thorough, but limit the description to only the essentials.
Once that’s done, you’ll need to determine which category each risk belongs to. Doing so helps to eventually assign risk owners.
Estimate the Risks
Now it’s time to estimate all the ways that each risk could potentially impact business, so you can come up with an action plan to troubleshoot them if things go south. This is when you would need to decide between using qualitative or quantitative measurements.
Mitigate the Risks
Your risk management plan should involve a strategy for mitigating, avoiding, or transferring risks. Depending on the circumstances, you can either:
- Avoid – eliminate the risk completely
- Transfer – shift the impact to a third party
- Mitigate– Decrease the probability or impact
Of course, the goal is to avoid the risk completely, and if you were to transfer the risk to a third party, you wouldn’t have to do much legwork since they’d be taking care of it. But what about mitigation? Well, that’s where you and your team can take the lead.
Take your time, and figure out with your team how each person will respond to each risk. Think of it like this: if something were to happen, the risk owner should be able to refer to your mitigation plan and know exactly what to do next.
Assign the Risks
For this step, you’ll need to assign a specific owner for each risk that you’ve identified. Choose someone who is capable and be sure to remind them that they’re responsible for mitigation if that time were to come.
Monitor the Risks
The last key element of risk management is implementing the plan, thus monitoring risks. Again, make sure to communicate the plan to relevant stakeholders, and allocate the necessary resources to make sure it’s smooth sailing.
The effectiveness of the plan must be reviewed periodically to ensure that it remains nimble and up-to-date. Conducting regular risk assessments and keeping an eye out for key risk indicators is crucial, because if a risk were to change or evolve, then your plan can too.
That’s It! Filling out a Risk Register Template is that Simple
By following these step-by-step instructions, you can create a comprehensive risk register that will help you effectively identify and mitigate risks within your organization, ensuring its long-term success. Here’s our free, downloadable risk register template from our resource center, Flight School, to get you on the right track.
If it’s still a bit overwhelming, just know we at TrustCloud can help you through it. If that’s the case, let’s talk!