I recently attended a fantastic half day course on grant funding which was hosted by Anthill Online and sponsored by KMPG and GrantReady. In the later part of the course, we were asked to provide definitions of terms which often appear in grant applications.
One of these terms was “risk” and it is a title which has a thousand definitions and meanings, which was clearly demonstrated in the course, and I want to share with you my definition of risk and how it came about.
As you’re probably aware, I’ve recently ceased serving in the full-time Navy (I still have do part time work and love every minute of it!) One of my major roles was to evaluate technical risk and provide advice on the operational impact of technical risk to enable command (the Captain of the Ship) to make an appropriate well informed decision. In my final position I was heavily involved in the implementation of Navy’s technical risk framework, which, included the definition of risk. The Navy at this stage unofficially used “risk = likelihood * hazard”
I remember having very long and somewhat academic discussions well outside normal business hours about what risk is and what it means, particularly how this formula worked. After literally four weeks, we settled on what I believe is a fantastic definition and one which can be used in almost any situation to help you understand risk.
Risk is the probability of an event acting on an object resulting in a consequence.
Risk is therefore a function of an event, an object and a consequence. Without all three, there is by definition no risk.
The risk of me (object) falling off my bike (event) resulting in a trip to the hospital (consequence) is a true risk (and a likely one I’m afraid!) Conversely, the risk of me (object) winning the lottery (event) has no consequence and therefore is not a risk.
Risk isn’t something to be afraid of as it is a part of everything we do. Correctly identified it can be managed and I hope my definition above can help you in identifying risks.