A risk register is an important tool used in enterprise risk management, financial risk management, IT risk management, and project management. The International Organization for Standardization (ISO) defines a risk register as “a record of information about identified risks.” While primarily used for regulatory compliance, risk registers also help project managers stay abreast of project risks.
A risk register usually takes the form of a risk log. That log can be a spreadsheet, a form, or a dashboard that lists:
- All identified risks associated with a project, enterprise, or business unit;
- The risk category;
- The likelihood of each risk becoming a threat or event; this can also be known as a risk rating (high, medium, low);
- The potential consequences of each risk event occurring;
- The costs to mitigate each risk;
- The specific steps required for appropriate risk mitigation;
- The name or title of the risk owner, who is the person responsible for managing each specific risk.
What Are Risks and Opportunities?
Risks don’t always have a negative impact, and their outcomes don’t need to be detrimental to your company. Sometimes risk can result in gain, such as an expansion into new markets or a merger. Opportunity identification is a part of your risk assessment process that allows you to balance these positive and negative possibilities; having a risk register will help you chart your company’s risks in relation to opportunities.
A successful growth plan for your company will weigh your risks against the opportunities for gain. This risk-to-reward ratio will allow you to see your risks as more than unwelcome outcomes to be avoided. Instead, you can determine whether the opportunity for growth is greater than the potential for harm, and let those factors guide your decision-making.
What Is a Risk Register Used For?
A risk register is used to identify potential risks in a project or an organization. Sometimes it’s used to fulfill regulatory compliance obligations, but mostly a risk register helps you to stay on top of issues that might derail intended outcomes. Risk managers and project managers alike need to use a risk register. Project management can’t succeed without having at least one of these important lists.
Why? Because risk identification in project management requires a thorough understanding of all the potential obstacles to the success of a project. Creating and maintaining a risk register is critical to project risk management. For every project an enterprise undertakes, there should be an accompanying project risk register.
Once a project is underway, regular monitoring of possible risks and responses is key. A project risk register can simplify this task by showing at a glance which risks exist, which risks are most worrisome, and how the enterprise should address them.
What Are the Benefits of a Risk and Opportunity Register?
A risk and opportunity register has many benefits beyond simply managing risk. For example, if your organization is one that needs to follow government compliance rules (such as in banking or healthcare), a risk register provides documentation that will be crucial in the event of an audit. Your risk register will also contain useful information that will help you develop an action plan for your company if a crisis should occur.
Your risk register can also be instrumental in guiding your company toward new growth. Having a clear record of your potential opportunities and risks will help you and your stakeholders decide which risks are worth taking and which risks are best avoided. The documentation in your risk register will also help you keep track of which staff members are assigned to what risk, and give you a tool for training as you hire new employees down the line.
Example of a Risk Register
There is no one way to create a risk register, and the best format for you will depend on your company or project. A risk register can be a simple list if your task is smaller in scale, or a more complex spreadsheet if you manage a larger company or a wide ranging project. Generally risk registers will include risk descriptions, severity, any relevant details, and the person to whom the risk has been assigned.
One common format is a risk heat map, which not only lists each risk but also charts them according to their likelihood and potential impact. This results in a visual representation (usually color coded) that quickly and clearly communicates what risks you should prioritize. Whatever template you choose, make sure that everyone on your team can access and understand your risk register.
How to Create a Risk Register
Those inexperienced with risk registers in project management may not know how to create a risk register. It’s a big job, especially for big projects – which is why businesses often use a risk register template. Excel spreadsheets are common, too.
To develop a risk register, risk managers collect and list every bit of information they can find about every identified risk, including the level of urgency, priority for each risk response should the risk become a threat, and what those responses should be. Risk team members usually work together to create the risk register.
Risks come and go, which is why every risk register for project management should be updated regularly as new risks arise. Project team meetings should include periodic reviews of the risk register (monthly, quarterly, or annually), as well as at the end of every phase in the project.
Manage Risk with ZenGRC
A well-managed and accessible risk register is a key component of your company’s risk management process. Maintaining that clarity, however, can be difficult while using outdated methods to track and manage your risk. To manage risk effectively, you need a solution that will provide your team with full transparency into your risk management plan.
ZenGRC is an innovative software that allows you to create a risk management system with a full real-time view of your organization’s risk landscape. The integrated software makes it simple to assign risk and track responses in the event of a crisis, and automated communication will keep all your team members on the same page.
Schedule a demo today to learn more about how ZenGRC can help you develop a successful risk management program at your company.