7 Essential Factors in Risk Perception

Posted on Nov 16, 2022 at 08:11 PM

Most of today's businesses and professions are almost risk-free. Therefore, it is rare to see a successful company that does not exercise a specific type of risk perception or so-called risk-perception science.

Your business may be affected by many foreseeable and unexpected risks (such as coronavirus) and physical or moral risks, which is self-evident.

We all know that at the start of any work, whatever its size and type, it means the beginning of risk and difficulty. Even if we are stable at work, we realise that risk may occur at any moment and must never be less, so we must learn the concepts of risk management and management to achieve higher success at work.

This article will teach you how to perceive risks if they exist, what risks they are, and how to manage them.

What is the concept of risk perception:

Risk perception can be defined as the initial judgment or decision about the risk's probability and severity when it occurs.

For example, The COVID-19 pandemic has had a devastating impact on life in countries and businesses, but it has had less effect on companies that were highly aware of the risks and had better outcomes.

So there are a lot of unique risks at work, and you might wonder what's the most critical risk to companies. The following lines will answer you.

Top 5 risks you may face at work:

Experience suggests that risk is multiple sources, so risk assessment is, of course, different depending on areas of work, but there are many common risks; here's a list of the most prominent ones:

• Physical Risks:

Physical hazards are the most well-known and perceived sources of danger in businesses by leaders. Indeed, there are some occupations where physical hazards are almost non-existent, but fires and explosions still cause more harm to workers and companies.

• Strategic risks:

All industries are exposed to risks, such as developing new drugs, banks exposed to financial troubles, and laboratory workers exposed to harmful gases and vapours. All risks of this type relate to the nature of work, so management should provide occupational safety and health conditions.

• Technological risks:

Technological risks in developed countries are lower than in third countries because of their significant development; companies may experience power outages, sometimes spikes in value or a lack of energy sources such as batteries and generators.

Leadership must continually assess and recognise risks of this nature and work to prepare for them.

• Site Risks:

The company's location may be prone to environmental disasters such as storms, tsunamis, and hurricanes. Here, the Department must inform all employees of ways to leave as soon as possible in the event of such disasters.

• The dangers of human acts:

The risks of human social acts are very high, the most widespread being embezzlement, theft, and drug or alcohol abuse. The Department can provide some coverage for treatment costs for its staff.

If you're a manager, don't forget to protect your company from fraud and embezzlement.

What are the best tips for perceiving risks?

The risks to companies come differently, from what may destroy the whole company, from which they cause significant and costly damage, and from which they have less impact, so you need to prepare for the various types of risks that may occur. Here is a list of the best factors and tips that will help you:

• Identifying risks:

This is the initial phase of the risk perception process, where a comprehensive list of risks that may occur to the company should be created as much as possible.

Studies show that most start-ups fail before they are five years old, and one of the main reasons is that risk needs to be accurately identified. 

Indeed, identifying risks for new start-ups is difficult, but fortunately, there are so-called risk management strategies.

You can also always ask yourself and your staff to determine what risks are the priority to address, and always remember that the impact of foreseeable risks when they occur is much lower than sudden risks.

• Don't be perfect:

Don't be ideal while you're anticipating risks, but be realistic, and you better always expect the worst, and ask the following question to all your employees, what's the worst thing that might happen to our company?

Remember that when your company builds on the expectation of the worst, you reduce the element of surprise and minimise its impact on you and all employees.

• Internal research and external research:

The meaning of doing internal research is that it happens within your company; for example, you can research with the marketing department to find out how to increase sales or do research with a department because of the high costs of its work and work together to mitigate it.

External research intends to learn to perceive risk from any company, competitor, or companies that have preceded you; you can learn from the success or failure of other companies to recognise the risk.

Data or information analysis tools may further assist in any analysis, research, or test to recognise the degree of risk.

• Ask your employees constantly:

It is also known that engaging or seeking employees directly with their day-to-day tasks makes their perception of risks preferable to others, so when you ask your employees how they feel about work characteristics and their expectation of risk, it helps you manage risk and improves the environment in which they work within your company.

Ask clients and analyse their complaints. Also, ask your employees,

• Consult and ask experts:

Sometimes you may need to consult an expert to help you realise the risks around you. For example, you may have some professional activities or relationships with professional people in their work and have experience in identifying risks within a particular area; you can invest your knowledge and question them!

Sometimes you may need expert-driven consultation to help you overcome risk management challenges, but remember that paying now will help you save a lot of money, time, and effort. 

• Analyze S.W.O.T:

SWOT analysis helps the individual and the company perceive the risks or threats that may arise in the future. You can create the analysis for each section or body separately and then conduct the research or study for the whole company.

In addition, SWOT analysis also helps you enhance people's skills and contributes to the design and development of human societies.

In conclusion,

risk perception processes are the key route to corporate success and visions, so constantly try to make risk perception a developmental stage for you and your company.

You can follow the steps previously listed, and you can move to attend training courses in governance, risk, and compliance in Paris, which will also support you in testing your and your employee's ability to recognise the risk.