Risk Profiling PDF Print E-mail

Assessing the true extent of "Risk"

Why Risk Profiling?

Risk profiling is to a company what cartography is to an explorer: it gives an organisation a clear picture of the hazards it might encounter as it progresses, and the information on which to formulate a strategy to avoid or handle them. It is also a science that calls for a great deal of skill.

Conventional theory defines risks as falling into four categories – assets, liabilities, personnel and fiscal. From an insurance viewpoint these may be adequate, but for most organisations these definitions are too narrow to encompass the full spectrum of risks that could hamper business performance and service delivery.

Protection of the Business


Risk profiling adds a fresh dimension to the established view of risk by looking beyond the protection of assets, and focussing instead on the protection of the business. The process calls for a broader and more disciplined approach than that taken by a conventional insurance led decision. It requires a defined systemic process to identify all the risks faced by an organisation, together with a robust methodology to assess and analyse these – you cannot manage a risk you don’t know about! This will allow an organisation to not only demonstrate good corporate governance and best practice, but also provide confidence to take business opportunities and operational decisions in the knowledge that the downside risks are managed.

Top Down

The process of risk profiling starts at the top. Rather than set out to assess the tactical risks of the day to day operation, the senior management of the organisation is asked to look at risks in terms of how they might affect their business plans and aspirations. By adopting this approach, a much clearer picture of what really needs to be protected soon begins to emerge. The trick to risk profiling is to identify the threats to key business and operational drivers, measure their risk tolerance, and establish measures to protect them.


Broad-based Approach

Such a broad-based approach calls for a significant level of senior management input and covers all departments. The process involves a mix of extensive interviews with senior management and heads of department, together with “brainstorming” sessions that have a particular strength in enhancing the team awareness of the interdependencies of risk. The process also assists in overcoming the operational politics that so often hamper rather than promote good risk management practice. It helps to identify common ground and the risks that all parties perceive to be significant. Once these foundations are established, it is possible to define a common framework within which all parties can work, achieving not only departmental aims, but also promoting the overall success of the organisation.

What emerges from the process is a comprehensive picture of the risks faced by the organisation both from within its own operations and from outside dependencies.

This gives the management the ability to prioritise them and develop solutions to manage or overcome them.


Although most organisations undertaking a risk profile exercise will identify opportunities to improve their risk management tactics, there are also significant benefits to be gained from the process of re-evaluation that that risk profiling involves. In many cases the process can lead to a far higher level of awareness among senior managers that moves risk management up the corporate agenda, leading inevitably to a better risk experience for the organisation, and greater confidence to take the organisation forward.


H & H Consulting

Cronk Beg

Ballagawne Road


Isle of Man



Tel: 07624 493844


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Web: www.handhconsulting.co.im