National Organisational Development Network

Risk Management process

Risk Management is a five step process: Step 1 Establish the context Step 2 Identify the risks Step !nalyse the risks Step " Eval#ate the risks Step $ %reat the risks %hro#gho#t each step it is essential that there is cons#ltation and comm#nication &ith everyone in yo#r organisation's f#nctions( activities and events )refer to diagram*+

Step 1 Establish the context

,efore risk can be clearly #nderstood and dealt &ith( it is important to #nderstand the context in &hich it exists+ -o# sho#ld define the relationship bet&een yo#r cl#b and the environment that it operates in so that the bo#ndaries for dealing &ith risk are clear+ Establish the content by considering: %he strategic context the environment &ithin &hich the organisation operates %he organisational context the ob.ectives( core activities and operation's of the cl#b+

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Step 2 Identify the risks

%he p#rpose of this step is to identify &hat co#ld go &rong )likelihood* and &hat is the conse/#ence )loss or damage* of it occ#rring+ 0ey /#estions to ask incl#de: 1hat can happen2 3ist risks( incidents or accidents that might happen by systematically &orking thro#gh each competition( activity or stage of yo#r event to identify &hat might happen at each stage+ 4o& and &hy it can happen2 3ist the possible ca#ses and scenarios or description of the risk( incident or accident+ 1hat is the likelihood of them happening2 1hat &ill be the conse/#ences if they do happen2 Risks can be physical( financial( ethical or legal+ 5hysical risks are those involving personal in.#ries( environmental and &eather conditions and the physical assets of the organisation s#ch as property( b#ildings( e/#ipment( vehicles( stock and gro#nds+ 6inancial risks are those that involve the assets of the organisation and incl#de theft( fra#d( loans( license fees( attendances( membership fees( ins#rance costs( lease payments( pay7o#t of damages claims or penalties and fines by the government+ Ethical risks involve act#al or potential harm to the rep#tation or beliefs of yo#r cl#b( &hile legal risks consist of responsibilities imposed on providers( participants and cons#mers arising from la&s made by federal( state and local government a#thorities+

Step 3 Analyse the risks ! e"al#ate$

%his involves analysing the likelihood and conse/#ences of each identified risk and deciding &hich risk factors &ill potentially have the greatest effect and sho#ld( therefore( receive priority &ith regard to ho& they &ill be managed+ %he level of risk is analysed by combining estimates of likelihood )table 1* and conse/#ences )table 2*( to determine the priority level of the risk )table *+ It is important to consider the conse/#ences and the likelihood of risk in the context of the activity( the nat#re of yo#r cl#b and any other factors that may alter the conse/#ences of likelihood of risk+ Risk eval#ation involves comparing the level of risk fo#nd d#ring the analysis process &ith previo#sly established risk criteria( and deciding &hether risks can be accepted+ If the risk falls into the lo& or acceptable categories( they may be accepted &ith minimal f#rther treatment+ %hese risks sho#ld be monitored and periodically revie&ed to ens#re they remain acceptable+ If risks do not fall into the lo& or acceptable category( they sho#ld be treated #sing one or more of the treatment options considered in step "+

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%he criteria for eval#ating the risks at yo#r cl#b are sho&n belo&:

%able 1 &ikelihood scale

8#estion &hat is the likelihood of the risk event occ#rring2 Rating + / 3 2 1 &I'E&I())* %he potential for problems to occ#r in a year A&M)S% ,ER%AI-. &ill probably occ#r( co#ld occ#r several times per year &I'E&0: high probability( likely to arise once per year 1)SSI2&E: reasonable likelihood that it may arise over a five7year period 3-&I'E&0: pla#sible( co#ld occ#r over a five to ten year period RARE: very #nlikely b#t not impossible( #nlikely over a ten year period

%able 2 &oss or damage impact scale

4#estion. &hat is the loss or damage impact if the risk event occ#rred se"erity5$ 1)%E-%IA& IM1A,% In terms of the ob.ectives of the cl#b ,A%AS%R)1(I,: most ob.ectives may not be achieved( or several severely affected MA6)R: most ob.ectives threatened( or one severely affected M)*ERA%E. some ob.ectives affected( considerable effort to rectify i+e+ sport in.#ry re/#ires medical attention and has some impact on participation in sport and9or other activity MI-)R. easily remedied( &ith some effort the ob.ectives can be achieved i+e+ sport in.#ry re/#ires first aid treatment and prevents immediate participation in sport and9or other activity -E7&I7I2&E. very small impact( rectified by normal processes i+e+ sport in.#ry b#t does not prevent participation

Rating + / 3

Risk priority
%he risk priority scale determines the nat#re of the risk and the action re/#ired+ %hey are indicators to assist in the decision making of &hat action is &arranted for the risks+ 8#estion: &hat is the risk priority2

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%able 3 Risk priority scale IM1A,%

+ ,atastrophic / Ma8or 3 Moderate 2 Minor 1 -egligible

+ Almost certain & I ' E & I ( ) ) * 1 Rare 2 3nlikely 3 1ossible / &ikely

Extreme 1$

Extreme 1$

Ma.or )2*

Ma.or )2*

Medi#m ) *

Extreme 1$

Extreme 1$

Ma.or )2*

Medi#m ) *

Minor )"*

Extreme 1$

Ma.or )2*

Ma.or )2*

Medi#m ) *

Minor )"*

Ma.or )2*

Ma.or )2*

Medi#m ) *

Minor )"*

Minor )"*

Medi#m ) *

Medi#m ) *

Minor )"*

Minor )"*

Minor )"*

'ey. Extreme Ma8or Medi#m Minor

Extreme risks that are likely to arise and have potentially serio#s conse/#ences re/#iring #rgent attention
Ma.or risks that are likely to arise and have potentially serio#s conse/#ences re/#iring #rgent attention or investigation Medi#m risks that are likely to arise or have serio#s conse/#ences re/#iring attention Minor risks and lo& conse/#ences that may be managed by ro#tine proced#res

!n example of ho& to #se the risk rating tables is incl#ded in !ttachment !+

Step / %reat the risks

Risk treatment involves identifying the range of options for treating the risk( eval#ating those options( preparing the risk treatment plans and implementing those plans+ It is abo#t considering the options for treatment and selecting the most appropriate method to achieve the desired o#tcome+ :ptions for treatment need to be proportionate to the significance of the risk( and the cost of treatment commens#rate &ith the potential benefits of treatment+ !ccording to the standard( treatment options incl#de:

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Accepting the risk for example most people &o#ld consider minor in.#ries in participating in the sporting activity as being an inherent risk+ A"oiding the risk is abo#t yo#r cl#b deciding either not to proceed &ith an activity( or choosing an alternate activity &ith acceptable risk &hich meets the ob.ects of yo#r cl#b+ 6or example( a cricket cl#b &ishing to raise f#nds may decide that a rock climbing competition &itho#t a properly trained and accredited instr#ctor( e/#ipment etc may decide a safer &ay of raising f#nds+ Red#cing the risk likelihood or conse/#ences or both is commonly practiced treatment of a risk &ithin sport( for example #se of mo#th g#ards for players in some sports i+e+ contact sports+ %ransferring the risk in f#ll or in part( &ill generally occ#r thro#gh contracts or notices for example yo#r ins#rance contract is perhaps the most commonly #sed risk transfer form #sed+ :ther examples incl#de lease agreements( &aivers( disclaimers( tickets( and &arning signs+ Retaining the risk is kno&ing that the risk treatment is not abo#t risk elimination( rather it is abo#t ackno&ledging the risk is an important part of the sport activity and some m#st be retained beca#se of the inherent nat#re of the sport activity+ It is important to consider the level of risk &hich is inherent and acceptable+ 9inancing the risk means the cl#b f#nding the conse/#ences of risk i+e+ providing f#nds to cover the costs of implementing the risk treatment+ Most comm#nity non profit sport cl#bs &o#ld not consider this option+

1hichever option yo# choose to treat a risk( if the risk has rated highly yo# &ill need to caref#lly consider necessary policies( proced#res and strategies to treat the risk+ %hese &ill incl#de: &hat is needed to treat the risk &ho has responsibility &hat is the timeframe ho& yo# &ill kno& &hen the risk has been s#ccessf#lly managed+

!lso( seek independent advice from yo#r broker( ins#rer( solicitor( financial advisor and9or affiliated state body+

Step + Monitor and re"ie:

!s &ith comm#nication and cons#ltation( monitoring and revie& is an ongoing part of risk management that is integral to every step of the process+ It is also the part of risk management that is most often given inade/#ate foc#s( and as a res#lt the risk management programs of many organisations become irrelevant and ineffective over time+ Monitoring and revie& ens#re that the important information generated by the risk management process is capt#red( #sed and maintained+ 6e& risks remain static+ 6actors that may affect the likelihood and conse/#ences of an o#tcome may change( as may the factors that affect the s#itability or cost of the vario#s treatment options+ Revie& is an integral part of the risk management treatment plan+ !s disc#ssed earlier( risk management is an integral part of all core b#siness f#nctions( and it sho#ld be seen and treated as s#ch+ Risk management sho#ld be f#lly incorporated into the operational and management processes at every level of the organisation and sho#ld be driven from the top do&n+

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Attachment A
(o: the risk rating :orks; Step 1 ! 2. Establish ,ontext ! Identify risk ! risk identified #nder physical sporting environment 7 ;Does our cricket club take all reasonable steps to check field for foreign objects which may result in injury to players< &o#ld be considered as follo&s: 4#estion. Step 3 Analyse the risk Is it likely that some of our club home field games may not be checked properly or at all using the CricketNSW field check requirements [likelihood 2 Ans:er. Maybe )probability -es* 4#estion: If yes! how likely" Ans:er. %able 1 3ikelihood rating &o#ld be a ; < )reasonable likelihood* over a season+ 4#estion. %able 2 If yes! what would be the consequences and#or the loss or damage impact of those consequences [se$erity " Ans:er. Impact rating &o#ld be a ; < )moderate( some ob.ectives threatened i+e+ player in.#ry may occ#r b#t can be easily remedied )prevented*( &ith some effort( ob.ectives can be achieved*+ 4#estion. What is the nature of the risk and the action required" Ans:er. %able 3 rate the risk =iven the likelihood rating is a ; < )possible* and the impact rating is a ;2< )minor*( the risk rates as a medi#m )level * risk on the risk rating scale+ So it is a medi#m risk that is possible to arise over a five year period b#t can be easily remedied+ 4#estion. Step / %reat the risk %ow should it be treated" Ans:er. Step / and +; Ens#re all vol#nteer cricket team coaches9managers are a&are of their game day obligations as re/#ired by >ricket ?S1 and >ricket !#stralia #nder their risk management program+ >l#b office bearers sho#ld ens#re that vol#nteer cricket team coaches9managers receive the appropriate training( information and compliance checklists and provide feedback+ %hey sho#ld have first aid kits and medical plan+

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