Every business needs to conduct a risk analysis when assigning responsibilities to staff and establishing performance standards. A good risk analysis will help you manage everyday workplace risks, and it will ensure that you don’t fall afoul of organisational or legal requirements.
Most work allocation or activity carries an element of risk – it depends on you to decide whether the benefit is worth the risk. Your business needs to know the risks you are exposed to and their likelihood of occurring. And you need to know the consequences of these risks and control them as much as possible.
Here’s a few simple steps to help your business conduct a risk analysis that will benefit your business and your staff.
1. What are your risks?
Businesses face many risks related to allocating work – perhaps more than first thought. Allocations must consider the performance of staff, the ability to meet your organisational objectives, and more formal regulations that place boundaries around the way your organisation will operate.
It’s common sense to make sure that your staff have a reasonable workload and are equipped to fulfil their responsibilities, but you also need to think about the potential for conflict between team members based on their role allocation. Consider the possibility of anti-discrimination claims that are made due to unfair work allocation
Regulations and legislation establish clear boundaries and often carry penalties. Keep your workplace healthy and safe, and your staff will be happy and productive, as well as preventing unnecessary disruptions. You’ll also need to ensure that your business complies with national employment standards, or a relevant award or agreement.
These are just some examples that carry risks for your staff and business operations, and they might carry a legal penalty too. Don’t ignore them, don’t be complacent – the first step is to know your risks.
2. What are the odds of something going wrong?
Once you know your risks, go through each one and assess the likelihood of it occurring. This step is much simpler, as you might already be familiar with a number of these risks and know how often you encounter them.
To assess the likelihood of each of the identified risks, a simple scale might consider whether the risk is:
- Rare – the risk would only occur under exceptional circumstances
- Unlikely – the risk will probably not occur
- Possible – the risk may occur under some circumstances
- Likely – the risk will probably occur
- Certain – the risk is going to occur
3. What are the consequences?
The next step is to predict the consequences. Just like in step 2, a scale like the one below will help determine the significance of each risk:
- Insignificant – No great impact
- Minor – Some impact however not of great significance
- Moderate – Impact on organisation, potential effect on objectives
- Major – Significant impact
- Catastrophic – Irreparable damage caused
A useful tool is to build a matrix to assess your risks. This will help you analyse and organise each risk into different categories, for example, from low to extreme, based on their likelihood and severity of consequence.
4. Control your risks
The final step in the risk management process is to decide how to control the risks. There are a few strategies available to your business:
- Avoidance: Get rid of it completely. Consider eliminating the risk or withdrawing from the activity that carries this risk.
- Reduction: Optimise your activities in a way that you minimise its exposure. You might not be able to eliminate it completely, but you can mitigate the circumstances that carry the risk.
- Sharing: Transfer or outsource the risk. You certainly can’t avoid all your risks, but you can be insured from some of their consequences
- Retention: Accept and budget for these risks occurring. You might determine it is worthwhile to carry a risk – in this case, be prepared for the costs.
The ARA Retail Institute runs multiple workshops on performance planning. Click on the link below to explore our upcoming courses and events.
About ARA Retail Institute
ARA Retail Institute is Australia’s leading retail training provider for both accredited and non-accredited learning programs. For more information, please visit: www.retailinstitute.org.au