What methods can agencies use to identify risks that are not already realized problems?

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AFERM Experts Say...

Realized problems are by definition issues, also known as deviations from expectations.  The events and conditions that caused the concern have already occurred and are usually referred to in the past tense.  By comparison, unrealized problems, also known as risks, are usually referred to in the future tense or as “what if “ questions.  The key to distinguishing unrealized risks from realized risks is to look at where they are in time and how they are described.  In summary, when an issue is identified in past tense it is typically a realized problem while an issue identified in future tense, or as a “what if” statement, represents a potential threat or opportunity.

Comments (1)

It’s imperative to integrate ERM with strategic planning and budget formulation considering OMB Circular A-11. Doing so allows for proactive and holistic development and alignment of key performance indicators with key risk indicators to promote scenario analysis and planning to support decision making that should involve developing alternatives and contingency plans. In addition, as risks are identified the application of the probability and business impact analyses are key components to understand the complexity of risks but to also understand the cost/benefits and any opportunities to be realized as an agency develops it’s risk mitigation plans with the appropriate level of vigor. The risks should be view from cross-cutting people, process and technological perspective as well.

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