How to Establish Scope of Risk Assessment
The best way of initiating a change management risk assessment is by dividing all the things that come under the scope of the change management program into three groups:
- items that remain the same after the change
- items poised to change
- items that could go either way
The items that remain the same do so mainly owing to their indispensability for the core business process or the very existence of the business in their present form. Examples of this category include patents, building and machinery, key personnel, and other capital assets. Such items normally do not pose any risks during the change management process.
The second list of items poised to change usually includes assets that have no value to the company’s core business. This includes outdated equipment, space that is standing idle, underused positions in the company, redundant processes, outdated product mix, and even redundant staff. Replacing or eliminating such items either reduce expenses or enhances revenue flow.
Risk assessment for this second list need to focus on:
- ensuring such items are really not needed for the company’s core processes
- making sure that the company leverages opportunity costs by shedding the discarded items and taking in new items in their place
The third list in the change management risk assessment is the gray area or items that could change or remain the same on implementing the change. The major scope of risk assessment lies in this group of items, to determine whether possible changes in such items pose a risk to the organization.
The best approach towards risk-assessment for items in this third list is through effecting a trade-off. For instance, curtailing the assembly line might curtail expenses and lead to better operating efficiency, but it might come as loss of morale to staff and loss of prestige owing to running a reduced set up. Risk assessment entails comparing the benefits of efficiency with the losses owing to loss of morale and prestige.