The COVID-19 pandemic has brought the concept of risk-based thinking to worldwide attention. The global scale of the pandemic and the indiscriminate way in which the virus is transmitted mean that risk experts must consider a vast number of risk profiles when calculating the threat.
Consider this: COVID-19 can be transmitted from anyone to anyone, which means every single person on the planet is at risk. Yet the nature of the virus and the different contexts in which people live mean that not everyone shares the same level of risk. Elderly people and those with pre-existing conditions are at very high risk of serious complications from COVID-19, while young, healthy people are at a much lower level of risk.
The economy is facing an extreme risk from the disruption to the labor market and mandatory isolation of consumers who would normally be out spending money, yet fully digital enterprises like Netflix have found considerable opportunity in catering to those isolated consumers who are looking for in-home entertainment. At the same time, many Netflix productions are at risk of disruption because the cast and crew of the shows they create are isolated because of the virus.
Risk, therefore, is a complex entity that can be many things at the same time to different people. An event like COVID-19 can put many people and some parts of the global economy at high-risk of harm, some people at low-risk of harm, and can present significant opportunities to different parts of the economy.
Understanding the Complexities of Risk
There are risks in taking action and pursuing an opportunity, while at the same time there are different risks in not doing so. Understanding the complexities of risk requires understanding, prioritizing, and treating risks so that you know how best to respond. Depending on your level of comfort with risk, you might choose to accept the risk, implement controls to reduce the risk, share the risk with partners, or avoid the risk by adjusting your business model.
Risk-based thinking helps you to become sensitive to the complexity of risk so that you can manage threats and opportunities at the same time. Annex SL, the high-level structure that aligns the new versions of the ISO standards dedicated to management systems, such as ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018, can help you to coordinate your risk management efforts throughout the organization while encouraging opportunities for innovation in mitigating threats.
Finding Opportunities in Risk
In Part III of our three-part series of Insight Reports dedicated to risk, From Threats to Opportunities: How Risk Management Can Inspire Innovation in Industry 4.0, quality expert Nicole Radziwill shows you how to engage in effective risk treatment and how to find the opportunities that risk can present. You’ll learn about the following:
- The importance of using SWOT analysis.
- How the Baldrige Performance Excellence Program can help you understand intelligent risk.
- How to manage risk and opportunity at the same time.
- How risk-based thinking supports innovation.