The risk scoring system, as experts believe, begins with a conventional approach to figure out the possibilities of occurrence. Some business and risk analysts often compare probability with likelihood. Probability is considered statistical, whereas likelihood is slightly qualitative. Analysts use likelihood’s qualitative approach to assess risks and make quantitative changes in projects. In an interview conducted by NC State University, Bruce Branson talks with Jennifer MacKethan, Global Risk Manager at Cisco Capital. Their discussion focused on risk scoring strategies and how they impact business.
How Does It Work
Jennifer states that the first thing to do is involve the senior leadership. When your team gets in discussions with the senior leadership and figures out what keeps them up at night, they gradually align their visions. Soon after that, you assess the data and see if it reflects the visions of your associates and leaders. However, accumulating data is extensive work. You need to talk to credit people, supply chain associates, and ground workers. Once the data is collected, you can review and discuss with upper management to assess the situation and calculate risks.
How to Enhance Strategies
To enhance risk scoring strategies, it is essential to calculate inherent risks and control efforts. Furthermore, have your team calculate the residual risk. The combination of inherent risks, control efforts, and residual risk help determine the action plan you need to follow. If it is deemed a high-risk situation, your team ensures that the mitigation plan is in order. Another thing to keep in mind is to make sure if the risk is operational or strategic. Strategic risks are difficult to be resolved with a mitigation plan. In the strategic risk situation, the staff should get in touch with senior leadership and discuss how to effectively resolve the situation.
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