Page History

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OVERVIEW

What is it?

The EC defines a risk as 'Any event or issue that could occur and adversely impact the achievement of the Commission's political, strategic and operational objective. Lost opportunities are also considered as risks' (European Commission, 2018. Risk Management in the Commission. Implementation Guide [2018-2019 Edition]). In other words, risk is a potential problem which might happen but has not yet.
Risk management refers to the 'continuous, proactive and systematic process of identifying, assessing and managing risks in line with the accepted risk levels, carried out at every level of the Commission to provide reasonable assurance as regards the achievement of the objectives' (European Commission, 2018. Risk Management in the Commission. Implementation Guide [2018-2019 Edition]). It comprises a set of techniques to ensure proactive management of potential problems and to mitigate the possible negative effects arising from risks which have materialized.

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Risk management follows a five-step approach, summarised in Figure 1.

\[Figure 1: Summary of Risk Management\]

Process
Step 1: Identify intervention objectives and outputs – What do we want to achieve? If the analysis does not begin with the objectives of the intervention, it is likely to focus on current risks instead of potential risks, which makes it difficult to judge the importance of risks.

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Requirements

Data/information. Risks need to be identified to the greatest extent possible: a deep knowledge of context and stakeholders as well as lessons from the past are key inputs. The starting point is often a literature review (context and sector analysis, lessons learned from previous interventions, recent evaluations, etc.), followed by more focused assessments.

Time. For all interventions, the time devoted to risk management must be integrated into the design phases. Under the budget support modality, operational managers must develop a specific risk management framework (see Action Document); this might be a separate exercise and involve additional time/resources.

Skills. N/A

Facilities and materials. N/A

Financial costs and sources. The risk analysis is a mandatory part of the intervention design and implementation. If external expertise is required, funds should be made available to cover the costs associated with fees, travel expenses and logistics. These funds may come from the project itself or through other EC instruments such as a framework contract or a technical cooperation facility.

Tips and tricks.

• Risk management embraces all intervention domains and management aspects – strategic decision-making, activity planning, operational effectiveness and efficiency, protection of assets and information, business continuity and staff management. Across all domains and aspects, the same basic question applies: Are the mitigation measures sufficient to reduce risk to an acceptable level?
• Risks (and assumptions) stem from the logic of an intervention. Hence, assessing and managing risks is an iterative process that can affect the design and the expected results. As necessary, such possible impacts need to be reflected in the intervention logic. Monitoring arrangements are critical in this regard.
  
  

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