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The 8 Kinds of Risks

We are prudent to consider our entire risk profile: that is, all of the risks that could affect us in the future. This begins with sorting them into the following risk categories: natural, technological, human-caused, proximity, security, crisis, enterprise, and cascading. We can assign all risks to one or more of these categories. In the coming issues, we will address all of these categories and provide overviews for how to prepare for them.

By Guy Robertson

Guy Robertson is a senior planner at TMC and an instructor at the Justice Institute of BC and Langara College. He has written five books and numer- ous articles on corporate security and disaster planning, and offered workshops and lectures at conferences across North America and in the UK.

Natural Risks

Natural risks include natural disasters (floods, fires, acts of God etc.) as well as a risk that we have recently become all too familiar withpandemic. Plans to mitigate natural risks tend to be better established than the other categories of risk, mainly because that’s what people think of when they hear “disaster.”

Technological Risks

Technological risks generally involve malfunctions and the loss of data. However, they can also include the risks associated with technological change. Learning about and how to use new technologies takes time and resources that many organizations fear that they cannot spare. However, they also fear that they cannot afford not to stay current on emerging technologies.

Human-Caused Risks

Human-caused risks (also known as the whoops factor) are caused by our imperfectability, and the fact that we, as a species, tend to inevitably make mistakes.

Proximity Risks

Proximity risks are risks associated with the physical environment around an organization. What was once an affluent part of town, could now be crime-ridden with a host of new risks. Conversely, proximity risks can also be associated with natural risks, like being located next to a river that could flood in the next big rainstorm, or the building next door catching fire.

Security Risks

Security risks can be associated with proximity risks, such as being located in a crime-filled area, or they can be associated with technological risks, such as hacking and other IT-related security risks.

Crisis Risks

Crises are risks that affect an entire organization, not just an isolated division. They can include strikes, bankruptcy, or a scandal involving an organization’s conduct.

Enterprise Risks

Enterprise risks include problems such as economic downturns, including those due to natural disasters, prolonged crises, loss of markets, hostile takeovers, labour disputes, negative legislation and other political activities that act against an organization’s interests.

Cascading Risks

Cascading risks involve a series of events, each one resulting in, or leading to further damage. For example, a small fire sets off the sprinkler systems, which causes flooding, water damage, technological failure, and data loss. In the case that an organization is not adequately prepared for any one of these outcomes, this can also lead to financial losses or layoffs.

Next Steps

Categorization is just the first step. In the coming issues, we will address the next steps to establish a series of plans to handle a number of outcomes within each category.

This article was published in the June 2020 edition of The TMC Advisor
- ISSN 2369-663X Volume:7 Issue:4

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