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Identification of causes for events – Risk Management

Identification of causes for events – Risk Management

Hello and welcome to this session, today I want to talk about is an area of great passion for me and that is the identification of causes for events, for risks within your organisation. I have talked on previous blogs about how we describe a risk properly, and we get it down to actually being an event. I have also talked about the fact that 75-80% of cases you can’t do anything about the consequence. If that event occurs you are going to see those consequences you have assessed. What we can do is try and reduce the likelihood that that event is going to occur. The way that we do that is, we identify our event, and then we ask one simple question, what would cause that event to occur? And we identify a range of causes. Some of those will be around controls that you already have in place around the organisation.

One of the causes might be an ineffective internal audit program, and down in your controls you might have an internal audit program – then you make the assessment on whether that is effective or ineffective. If it is ineffective then part of our treatment is going to strengthen that control environment around it. One of the keys that I just don’t understand in many organisation they will identify a risk and if it is actually an event they are not thinking about the causes. They are going directly to what they can do to fix it or to stop it. But if we identify every single one of our causes, we can actually start to put either controls against them and identify the current controls we have got in place or if there are causes there that aren’t addressed by current controls then we identify new treatments if they are required.

It all comes down to the simple process of what could go wrong and what would cause it to go wrong. If you can identify what can cause it to go wrong you are already well and truly down the path of making sure (or having the opportunity to make sure) that it doesn’t happen in the first place. So identify what can go wrong, and then ask yourself what would cause it to go wrong. That’s all I’ve got for this session, so as always, let’s be careful out there.

Written by Rod Farrar

Rod is an accomplished risk consultant with extensive experience in the delivery of professional consultancy services to government, corporate and not-for-profit sectors. Rod takes every opportunity available to ensure his risk management knowledge remains at the ‘cutting edge’ of the discipline. Rod’s Risk Management expertise is highly sought after as is the insight he provides in his risk management training and workshop facilitation. Rod was recognised by the Risk Management Institution of Australia as the 2016 Risk Consultant of the Year and one of the first five Certified Chief Risk Officers in Australasia.