What is risk?

What one person regards as a risk, another may not. To this extent at least risk is
defined by individual perception. The Australian Standard (AS/!S "#$% & '(()*
defines risk as+
,the chance of something happening -hich -ill impact upon ob.ectives/. 0t is measured
in terms of conse1uences and likelihood./
0n other -ords
What unto-ard things can happen2
What is the likelihood of them happening2
What -ill be the conse1uences if they do happen2
What risks do sport and recreation organizations
face?
Sport and recreation organi3ations can be exposed to a -ide range of risks. All too often
through -e only think of and respond to the more obvious risks, such as those that may
cause in.ury to participants. These obvious risks may -ell account for most of an
organi3ation4s risk exposure, but this does not mean that some of the less obvious risks
cannot be .ust as costly.
0ncreasingly organi3ations must consider a more complex range of risks such as those
arising from legal and commercial relationships, adverse natural events, those that may
result in financial losses and even those that may cause loss of reputation or bad
publicity.
The risks an organi3ation is exposed to -ill depend upon many factors, but generally
the larger the organi3ation, and the more activities it is involved in, the more risks it -ill
face.
5ost sport and recreation organi3ations already manage risks. Some -ell, others not so
-ell. The challenge -e face in a rapidly changing -orld is to ensure our risk
management is effective, and keeps pace -ith change.
6isk management for the latter re1uires a systematic and rational approach. 0t re1uires+
7or-ard thinking + Anticipating risks and preparing for them
8ateral thinking + Searching for ne- and better solutions
6esponsible thinking + 6isk management rather than risky management
9alanced thinking + 6ecogni3ing the economic realities of risk reduction,
and striking a reasonable balance bet-een costs and
benefits
What are some benefits of good risk management?
:rgani3ations applying sensible risk management can expect many benefits. Some
may be+
6educed likelihood of undesirable and costly surprises
0mproved 1uality of the experience the organi3ation offers
9etter strategic outcomes
0mproved prospects for viability of the organi3ation
9etter protection of assets managed by an organi3ation
;ossible reductions in insurance premiums
A more confident and -illing base of administrations, official and volunteers
THE RISK MANAEMENT !R"#ESS
!rocess S$mmar%
The generic risk management process is neither innovative nor complicated. 6ather it is
a logical process that can be applied to any activity, asset, pro.ect or program.
&efine the scope of app'ication
<ecide -hat you are applying the process to, and -hat outcomes you expect.
Estab'ish and $nderstand the conte(t
The risks to -hich an organi3ation is exposed, and ho- they are evaluated and treated,
must be vie-ed in context -ith the organi3ation4s social, legal, and economic
environments, its aims and capabilities, and the risk profile of the activity for -hich the
organi3ation exists. 0mportantly, this step provides a rationale for the evaluation of risks
in terms of -hat may, or may not, be acceptable to the organi3ation.
Identif% the risks
A thorough approach to the identification of risks involves three steps+
0dentify the sources of risk
0dentify -hat could be affected
<efine the risk
0t is also important to the factors that may increase or decrease likelihood and
conse1uences of the event.
E)a'$ate the risks
The first step of evaluation is analysis. This is based on likelihood and conse1uences.
=o- often is an event likely to happen2
What -ill the severity of the conse1uences be2
The ans-ers to these 1uestions -ill indicate the level of risk that exists.
The second step is to assess this against the established context to determine+
0s the risk acceptable or unacceptable2
:bviously unacceptable risks should be treated. >valuation should also reveal a priority
for management and indicate the need for specialist advice.
Treat the risks
6isk management options may include avoiding, reducing, transferring, financing or
simply accepting the risk. :nce the best option has been selected, a normal planning
process should be adopted to guide implementation.
Imp'ementation
Transferring theory into action tends not to happen automatically :n?going commitment
from those delegated risk management responsibilities -ill be necessary.
Monitor and re)ie*
Sport and recreation organi3ation exist in a dynamic environment. 5onitoring and
periodic revie- are essential to an effective risk management program. To this end it is
important to document all stages of the risk management process.
Risk Identification
0dentification re1uires a mix of kno-ledge, experience, lateral thinking and pessimism. 0t
is necessary to look beyond the familiar and is a matter of considering+
What are the possible sources of risk2
What is at risk2
What are the effects or conse1uences2
The fundamental differences bet-een sports and recreations and the variance in their
si3e, structure, and operation present a uni1ue set of risks for each organi3ation and
make it difficult to provide a comprehensive template of risks. =o-ever the prompts
listed belo- offer a good starting point for most organi3ations in identifying the risks to
-hich they may be exposed.
What are the possib'e
so$rces of risk?
What is at risk? What *i'' the effect or
conse+$ences be?
6elationships
@ommercial
8egal
7inancial
;olitical
=uman factors
=ealth
=uman error
egligence
Anti?social behavior
@riminal activities
;eople
;layers
5anagement
:fficials / referees
Spectators
Sponsors
;ublic
Assets
Structures
Arounds
Behicles
>1uipment
in.ury
death
damage
loss
,atural/ events
7ire
Advance climatic
conditions
Bermin / insects
>arth1uake
>1uipment / technology
<esign fault
5is?use
@hattels
>nvironment
7inances
0ntangibles
Aood -ill
reputation
&efining the risk
0t is important to clearly define each risk to -hich the organi3ation is exposed to support
the risk management process. This involves matching the source of risk -ith -hat is at
risk, and -hat the effect might be. 7or example, the ;arks and 6ecreation <epartment
of a council in identifying possible risks may consider+
!ossib'e so$rce of risk
6abbits digging holes on a soccer pitch
What is at risk?
;eople (players, referees, council management*
Assets (finances*
0ntangibles (reputation*
What *i'' the effect be?
<amage
0n.ury
8oss
Three of the risks defined could be+
There is a risk that players could be in.ured by tripping in a rabbit hol
There is a risk that litigation against the council (and subse1uent financialoss*
could result if a player is in.ured
There is a risk that the council4s reputation -ill suffer if the rabbit problem is not
managed.
With the expectation of those risks that may be considered fanciful, all risks that are
defined should be documented in a format that allo-s evaluation and treatment to be
noted. This is not only useful for future references, but can also be used to demonstrate
sound risk management if called upon to do so.
Some consideration of the factors that may increase or decrease the likelihood of an
event such as those mentioned above is inevitable in the identification process. 0t is
important to note these points for consideration in the evaluation and treatment of the
risk.