There are three types of risk…

Risk management is a specialist field within OM, which we discuss in chapter 13.  It applies not just to companies but to all walks of life, including governments.  Recently the OECD Council has published a set of recommendations for its member on the governance of critical risks.  Their 13 page report can be found here.

What caught our eye was the statement that there are three types of risk.

  1. Sudden onset events – such as geological or meteorological phenomena (e.g. tsunami) or human induced actions (e.g. terrorism, industrial accident)
  2. Gradual onset events – ie occurrences that escalate in scale over time (e.g. pandemics)
  3. Steady state activities – i.e. risks that endure over extended periods of time (e.g. organised crime, as yet incurable diseases).

The report goes on to identify how governments should go about managing these different types of risk.  Operators may gain some insight from these proposals, although many of them are standard practice (raise awareness of risks, establish business continuity plans, etc.).

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