Risk Evaluation: A Case Study Example

Introduction

Risk management is the identification, analysis, evaluation and mitigation of risks. Risks are often evaluated according to the probability of the risk occurring and the impact of the risk if it does so. This determines an organisation’s risk exposure. A risk evaluation matrix, using a simple scoring system, is often used to capture the results of this exercise. An example is shown below:

The matrix is a highly visual method of evaluating the risks and demonstrating their relative importance. It allows the risk manager to prioritise risk mitigation so that limited resources can be focused where needed in order to reduce the organisation’s risk exposure.

World Bank has produced a guidance document for procuring medical diagnostic imaging (MDI) equipment.[1] This has been used and adapted to produce a worked example of a typical procurement risk evaluation exercise using the demonstrated method. It should be noted that World Bank used a simplified method of three levels of probability and impact (low/medium/high) in its analysis. The worked example is contained in the following section.

[1] http://pubdocs.worldbank.org/en/258511553620191211/Procurement-Guidance-MDI-Equipment-Buyers.pdf