5.59 Risk management is a structured approach to identifying, assessing and controlling risks that emerge during the course of the policy, programme or project lifecycle. Its task is to ensure an organisation makes cost-effective use of a risk process that has a series of well-defined steps to support better decision-making through good understanding of the risks inherent in a proposal and their likely impact. Risk management involves:
❑ Identifying possible risks in advance and putting mechanisms in place to minimise the likelihood of their materialising with adverse effects;
❑ Having processes in place to monitor risks, and access to reliable, up-to-date information about risks;
❑ The right balance of control in place to mitigate the adverse consequences of the risks, if they should materialise; and,
❑ Decision-making processes supported by a framework of risk analysis and evaluation.
5.60 Annex 4 provides more information on risk management.