What should an organization first do in its risk management process?

In the risk management process, the initial step an organization should undertake is to identify the risks. This foundational phase is critical because understanding what potential risks exist allows an organization to develop more effective strategies for managing those risks. By identifying risks early on, the organization can prioritize them and allocate appropriate resources to address their impact.

Risk identification involves recognizing the internal and external factors that could affect the organization negatively. This could include a wide range of risks, such as financial risks, operational risks, compliance risks, and strategic risks. Once these risks are identified, the organization can then assess their likelihood and potential impact, which forms the basis for subsequent steps in the risk management process such as risk assessment, analysis, and treatment.

The other steps, like risk monitoring, risk communication, and risk transfer, rely heavily on having assessed and identified these risks first. Without a clear understanding of the risks present, any actions taken in these later stages could be misguided or ineffective. Therefore, identifying risks is fundamentally the cornerstone of successful risk management.