Framing risk identification: a managerial perspective

Purpose This is a conceptual paper that aims to (1) discuss how risk identification outcomes differ between Risk Management 1 (RM1) and Risk Management 2 (RM2) and (2) describe the potential consequences of these different outcomes on the organization at different management levels. This research challenges the traditional thinking that risk management is confined to the financial and operational aspects of the organization. It presents risk management as a strategic and value-adding process that contributes to organizational safety and which should be considered as an inseparable part of corporate strategy. Design/methodology/approach A literature review was conducted to explain the differences between RM1 and RM2 and how risk identification outcomes are likely to differ according to the overall risk management scheme adopted within an organization. The research approach is based on extensive review of the existing academic literature, as well as practitioner opinions, and reports and information produced by organizations outside of traditional academic publishing channels, underpinned by theoretical and practical reasoning. Non-academic sources were tested using the CRAAP criteria for quality and reliability purposes. Findings RM1 and RM2 are two different forms of risk management. Therefore, the outcomes of the risk identification process will differ accordingly. In other words, the nature of the risk management scheme adopted within an organization guides the outcomes of risk identification. The findings of this paper serve as theoretically derived propositions, expert reflections, professional recommendations and conceptual insights rather than definitive findings. Practical implications Senior executives need to be aware of the form of risk management adopted, and whether they follow RM1 or RM2 in their organizations. This is significant as it describes how different risk management arrangements may produce different risk identification outcomes. Risk management has commonly been presented as a “process” in the literature but less often discussed as a corporate philosophy that can influence other areas of business. Originality/value Based on the literature review, it was found that research on RM1 and RM2 is scarce and is limited to a few online discussions posted on some web forums and accordingly, this is the first structured study that discusses how risk identification outcomes may vary between RM1 and RM2.