Risk Management: The Hidden Role of Risk Perception

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Risk management is the heartbeat of every thriving business, steering it toward stability and success. Central to this process is risk assessment, where we measure the probability and likelihood of the identified threats. In an ideal world, risk assessment is an exercise in objectivity and careful prediction. However, an array of non-rational factors color our risk perception and subtly influence decision-making, including:

1. Dread: If the outcome is particularly terrible, our perception of the risk increases. For example, if a risk might lead to bankruptcy, we tend to overestimate its probability.
2. Choice: Voluntary risk-taking is seen as less threatening than forced risk exposure. For instance, a company voluntarily implementing a new IT system perceives the risks as lower compared to a situation where it is mandatory due to regulatory changes.
3. Novelty: New, unfamiliar risks are usually perceived as higher than known ones. For instance, new cyber threats have emerged as technology evolves, such as advanced phishing attacks or ransomware. Businesses typically assess these new risks as higher than familiar ones, like traditional viruses. 
4. Publicity: High media coverage of a risk amplifies its perception. For example, if the media is running stories on corporate data breaches, these will be perceived as higher risk.
5. Risk-Benefit Trade-off: People tend to downplay risks that offer a highly desirable perceived benefit. We often see this when a corporation over-invests in a hot new technology like blockchain.

In all of these instances, non-rational factors can distort our ability to objectively assess the level of risk. Recognizing these factors helps us develop more accurate risk models and more appropriate mitigation strategies.

Risk Register by ProjectBalm

Risk assessment is much easier to do with an appropriate tool. This is one reason we created Risk Register by ProjectBalm.

Our goal was to automate best practice risk management techniques, and do so via an elegant, usable interface that works with you, and not against you. Risk Register will help you to identify, analyse, treat and monitor risks more easily and effectively than ever before.

If you are experienced at risk management, you will find in Risk Register a tool that works the way you want it to work. If you are new to risk management, our documentation and videos will take you through the whole risk management process, giving lots of useful examples.

Risk Register is fully compatible with risk management standards such as ISO 31000, and can also be used for governance, risk, and compliance (GRC) programs such as Sarbanes-Oxley and PCI. And, of course, Risk Register allows you to easily distinguish between opportunities and threats.

Over the last few years, we've grown to become the most popular risk management solution in the Jira marketplace and we are now an Atlassian Platinum Partner. Why not try out Risk Register by ProjectBalm for yourself?