What is Resource Allocation
Resource allocation, in the scope of risk management, is the process of how an organization distributes its resources across the company for specific uses. This includes assigning personnel to specific tasks or projects, machines or equipment, and of course monetary resources as well.
This is an integral part of any successful business, as it must revolve around strategic planning of company goals. Properly allocating resources is crucial for a company to ensure growth and future success. Allocation takes place on the understanding that resources are finite and must be split to maximize the efficiency of what is currently available.
Risk-based Resource Allocation
So, if resource allocation is so important, what are your starting steps? We believe in utilizing a risk-based method of determining where resources are needed most. This will follow a typical risk assessment process across your organization to get accurate data. This process can be reduced to 5 main steps.
1. Identify Risks
2. Quantify the Risk
3. Determine Remediation Strategy
4. Calculate Resource Demand
5. Monitor and Review
The first task is to identify risks to your organization, as these risks will directly correlate with your success. You’ll gain a deeper understanding of how these risks tie into everyday functions and start to correlate how they impact the overarching goals of your company. Identify risks using industry standards and regulations as guidelines, also incorporating previous risk data, incidents, and geographical risk data. Once these risks are identified, you’ll then begin the process of risk scoring. In quantifying risk, you’ll look at its relevancy to your company, as well as the likelihood and severity of the risk. These factors contribute to an overall risk score, which will be used to observe your most critical threats once the assessment is completed. The risk scoring process will counteract bias and standardize the scoring process across multiple assets.
Once all risks have been scored, begin planning remediation. This encompasses all the steps you will take to mitigate the risk, eliminating it or reducing it to an acceptable level. Be sure to complete this for every risk, if time permits, including those deemed low risk. This will enable you to plan to the best of your ability and fully utilize your available resources. This is closely tied to the next step, which will calculate resource demand for finishing all the tasks listed for each risk. Important factors include noting resource availability and the time needed to complete each project. It’s important to be realistic here, don’t over or underestimate. Use any data available and be sure to update as tasks are completed so you can adjust accordingly.
Starting with your most critical risks, you will go through and map the calculated resource demand against what is available, checking different combinations to see the greatest positive impact you can create. It may be that your highest identified risk is also the most time-consuming and expensive to mitigate. In such a scenario, it might be in your best interest to mitigate the 3 following risks that would collectively demand the same amount of resources. Use these projections to create the most efficient and effective strategy.
Finally, you will monitor and review this process to determine if your efforts were effective, should be continued, or if resource distribution towards a specific risk needs to be altered. New risks will constantly emerge and some risks will no longer exist, as well as consistently fluctuating risk levels. Set regular assessment intervals to adjust your data and reevaluate decisions.
Start Your Assessment
Now that you have an effective strategy for allocating resources, its time to begin your first assessment. You may need to complete a presentation prior to getting approval for this process. RiskWatch offers free assessments on our trial accounts, allowing you to complete up to 3 assessments using our built-in assessment criteria. This free data will allow you to build a case for utilizing a risk-based resource allocation strategy, highlighting the identified risks, proposed mitigation, expected cost, and impact to your organization. Additionally, the RiskWatch platform eliminates report writing, creating an instant C-level report for your presentation with actual, relevant data. Simply add in details about organizational goals to tie your report together.