Rating your Risks
Author: Carolyn Claridge
I wrote this article for the VETIG Newsletter Summer edition, 2016. Please visit www.vetig.com.au for more information on the Vocational Education and Training Industry Group and how to become a member of this not-for-profit organisation representing vocational training in Australia.
Once you have identified the risks to your RTO, you need to assess the likelihood (table 1) of them happening and the possible consequence (table 2) if they do[1]. This is referred to as the risk impact (table 3), which is calculated using this formula:
Impact of risk = consequence x likelihood
Table 1: Risk Likelihood
The following Likelihood Rating Table should be used to estimate the possibility of the event (i.e. risk) occurring.
| LIKELIHOOD | DESCRIPTION |
| Almost Certain | The event is expected to occur in most circumstances. |
| Likely | The event will probably occur in most circumstances. |
| Possible | The event might (or could) occur at some time. |
| Unlikely | The event will probably not occur. |
| Rare | The event may only occur in exceptional circumstances. |
Table 2: Risk Consequence
When using the below table, consider the impact any risk would have on the aim of VETIG – as well as the impact upon the objectives of the particular activity or function.
| CONSEQUENCE | DESCRIPTION |
| Insignificant | Low level Impact with negligible consequences on the aim or activity objectives that can be controlled by routine management procedures (no injuries, negligible financial Loss or disruption to non-essential infrastructure/data). |
| Minor | The consequences would threaten the efficiency or effectiveness of achieving some aspects of the organisation’s aim or activity objectives, requiring management effort to minimise Impact (minimal financial Loss, injuries requiring first aid only, minor political Impact or disruption to non-essential infrastructure/data). |
| Moderate | A significant/medium potential of affecting the achievement of the organisation’s aim or activity objectives (moderate financial Loss or political Impact, injuries requiring medical treatment only, medium term Loss of some essential infrastructure/data). |
| Major | A very high potential to impair the achievement of the organisation’s aim or activity objectives (major financial Loss or political Impact, significant occupational, health, safety and welfare incident/s, long term Loss of some critical infrastructure/data). |
| Catastrophic | An extreme potential to threaten the sustainability of the organisation or its aims and activities (huge financial Loss or political Impact, very serious occupational health, safety and welfare incident/s, permanent Loss of critical infrastructure/data). |
Table 3: Risk Impact Rating
Combining the estimates of the Likelihood and Consequences of the event occurring.
| LIKELIHOOD |
CONSEQUENCES |
||||
| INSIGNIFICANT | MINOR | MODERATE | MAJOR | CATASTROPHIC | |
| Almost Certain | Significant | Significant | High | High | High |
| Likely | Moderate | Significant | Significant | High | High |
| Possible | Low | Moderate | Significant | High | High |
| Unlikely | Low | Low | Moderate | Significant | High |
| Rare | Low | Low | Moderate | Significant | Significant |
Once you have established the risk impact, you need to make a decision how you will manage them.
For example, all of the significant risks (highlighted above) would need to have activities listed which would mitigate the risk, with responsible people assigned for implementation.
You would probably decide, with your management team, to also address the risks rated as ‘High’.
You may not address the Moderate risks as you may not have the resourcing to do so, but decide rather to keep a ‘watching brief’ over them.
References:
[1] The Queensland Government has an informative section on their Business and Industry portal in context of running a business – go to https://www.business.qld.gov.au/business/running/risk-management
