Risk awareness

Explanation

Risk awareness is a capability of an organisation to be able to recognise risks when they arise, from whatever source they may come. A culture of risk awareness suggests that this capability (or competence) is present throughout the organisation and is woven into the normal routines, rituals, ways of thinking and is taken-for-granted in all parts of the company and in all employees.

***********


Why is it necessary for organisation to cultivate a culture of risk awareness and that this should permeate all levels of the company?


Risks can arise in any part of the organisation and at any level. Not all risks are at the strategic level and can be captured by a risk assessment. A culture of risk awareness will help ensure that all employees are capable of identifying risks as and when they arise.

Risks are dynamic and rise and fall with changes in the business environment and with changes in the company’s activities. With changes to the company’s risk profile occurring all the time, it cannot be assumed that the risks present at the most recent risk assessment will remain the same. Being prepared to adapt to changes is a key advantage of a culture of risk awareness.


A lack of risk awareness is often evidence of a lack of risk management strategy in the organisation. This, in turn, can be dangerous as the company could be more exposed to risk than it need be because of the lack of attentiveness by staff. A lack of effectiveness of risk management strategy leaves the company vulnerable to unrecognised or wrongly assessed risks.



**********