Risk Assessment Vs Risk Management: How Are they Different?

Risk Assessment Vs Risk Management

Understanding the risks is the first step to make informed business plans, strategies, procedures, processes, and decisions. The organizations that overlook the concept of risks are likely to face more challenges than usual and a declined productivity. Hence, it is imperative to perform risk management right to avoid any unpleasant surprises.

Every business face certain risk to achieve its quality objectives. It will not be wrong to say that risk is the primary requirement for development, growth, and profitability. But you must know the different methods you can use to deal with risks and gain success.

Before you learn about risk management, it would be better to understand the concept of risk assessment even though certain risk related terminologies are used interchangeably. In this post, we will dig deeper in the commonly used risk terminologies beginning with risk assessment.

What is risk assessment?

Risk assessment refers to the evaluation of all the potential risks associated with a certain activity or your organization’s way of doing business. It includes different types of risks such as operational risks, project-related risks, process-related risks, and much more.

Every risk assessment process consists of two critical procedures, namely:

• Risk Identification

Since risk constitutes of two parts i.e., the probability of something going wrong and what could be the consequences of it.

Considering the probability of things going wrong at different phases or processes comes under risk identification. For example – you are manufacturing a spare part, the things that can go wrong are its measurements such as height or weight dimensions. Hence, you have identified the risks involved.

• Risk Analysis

On the other hand, risk analysis covers the other part where the possible consequences of a risk are considered. For example – if the spare part is manufactured with wrong dimensions, what could be the consequences? Will it lead to the product failure? Or How it will be impacting the functionality of the product.

Related Topics: Know How Quality Management and Risk Management Inter-related

What are the different types of risk assessments?

The types of risk assessment activities in any organization depend on the operational activities conducted on a regular basis. Many industries have specific environmental or legislative requirements to take care of. Some of the most common types of risk assessment activities include:

• Fire-Safety Related Risk Assessments

To prevent fire incidents in the organization.

• Health and Safety Related Risk Assessments

To prevent any disease or injury to the workforce.

• Equipment Usage Related Risk Assessments

To prevent risks of overusing the equipment.

• COSHH Related Risk Assessments

To prevent accidents, especially in the workplaces that use hazardous substances.

Businesses may have different risk assessment methods and strategies based on the types of operations conducted. The strategy shall contain the details of the risks and the step-by-step procedure that your team needs to follow to control its spread.

Why are risk assessments important?

As already discussed above, risk assessments are the primary step for effective risk management. It is recommended for every industry or organization to document their risk assessment strategy. After-all, it ensures the well-being of the employees and employers.

The main objectives of performing risk assessments are:

• Identification of the health and safety-related hazards by evaluating the risks identified within the workplace.
• Evaluation of the effectiveness of existing risk control measures and recognizing the need for new controls.
• Ensuring that all the controls are correctly implemented, leaving no room for loopholes.
• Prioritizing the other resources to ensure adequate controls and risk management.

Not having sufficient risk management controls may transform risks into expensive learning for a business to prioritize risk for making better business decisions. There will not be only the financial loss. The companies will also see the impact on productivity, equipment efficiency, employee engagement, and most importantly, brand reputation and market share.

When and how to conduct the risk assessments?

Another critical aspect of risk assessment that businesses face more often is when to conduct them.

The best time to perform a risk assessment is before the task/activity designated. It will help eliminate and prevent numerous issues beforehand that may have severe consequences if left unattended.

You must take into consideration that risk assessment is not a one-time activity. You need to review it regularly to make necessary changes and upgrades to managing risk more proactively and efficiently.

Now that you know how a regular risk-assessment activity should be planned and reviewed regularly, you must create a suitable strategy for conducting the risk assessments.

For any type of risk- the typical risk assessment plan includes following steps:

• Identifying the critical assets or data that are vulnerable to the risks.
• Creating different risk profiles for different assets.
• Mapping the processes connected with those assets.
• Prioritizing the risks to be addressed on urgent basis.
• Developing a corrective action plan for sudden failures.
• Developing a preventive plan to minimize attacks and vulnerabilities.
• Monitoring and reviewing risks on a continuous basis.

The industries generally prioritize their process/product related risks as:

• Moderate
• Severe
• High
• Low

What is risk management?

Risk management refers to the process of identifying, assessing, and eliminating risks that can cost businesses more than monetary loss. Through risk management strategies, companies can stay prepared for unexpected events and surprises. You have different ways of managing risks, such as:

• Avoiding the risks that are of no advantage to your business.
• Sharing the risks with the team, stakeholders, and third-party to lower its burden.
• Accepting the risks that have no possible solution at the particular time or may require a contingency plan in the later phase.
• Controlling the risks through suitable CAPA Management plans. You can also rely on PDCA, i.e., Plan-Do-Check-Act methodology, to manage risks efficiently and effectively.

Implementing the risk management plan prevents risks and monetary losses and drives multiple benefits to the organizations. Some of them are:

• Creating a safer and secure work environment for your workforce and manufacturing safer products for the customers.
• Increasing the operational excellence of the business while decreasing the possibilities of compliance issues.
• Ensuring protection from adverse events that may impact the company’s reputation and work environment.
• Protecting all involved parties and critical assets from the potential risks.
• Helping organizations to establish prevention strategies and contingency plans.

Hence, risk management is the umbrella term covering all the risks related activities, including risk assessment, risk analysis, and much more.

Hope you have a clear distinction between risk management and risk assessment and can prepare a better strategy to eliminate and prevent risks.

Is Automation the Next-Big Thing?

Yes, Automation is indeed the next big thing to obtain accurate and consistent results especially when it comes to risk assessment and risk management activities. The organizations are looking forward to proactive approach of managing risks, which can be achieved only through automation of tasks and utilizing the right technology.

Having the right quality management solution that can help you document, monitor, and track all the risks, the action plans implemented, and the effective resolution systematically can protect you from the compliance issues.

Qualityze EQMS Suite enables organizations to identify, document, and eliminate the quality and compliance risks. It also helps them to prioritize the risks, based on the different metrics. It comes with built-in risk matrix to evaluate the risk severity and prioritize the resolution activity accordingly.

Qualityze also generates the audit trail of the risk management activities and keeps every detail documented for quick retrieval at the time of regulatory inspections and audits.

Experience the most simplified way to manage risks related to the different quality management activities with Qualityze EQMS Suite and make informed business decisions for improved bottom line including productivity and profitability.

If you wish to know more about Qualityze EQMS Software and the built-in risk management tools, please get in touch with our customer success team on 1-877-207-8616 or write to us at info@qualityze.com; and we will be right there for you!