Risk Reporting: A Definition, Tips, and Free Templates
From negotiating on salary to investing in the stock market, risk is an inherent part of the business world. You know that risk. You’ve dealt with it. But did you know you can easily communicate that to everyone? When dealing with risks that affect an entire company, you’ll need to share information about them with people in charge. Risk reports are a tool for doing that — and if you need a little support, you’ve come to the right place.
You can write a great report, even if you’d never heard of it before today. In this article, you’ll learn what they are, why you should write one, and which type is best for you. You’ll also get free templates to help you get started.
What is risk reporting?
Risks are everywhere. If an organization wants to survive, they need to do their best to manage them — and that means knowing what they’re up against. Risk reports communicate that knowledge to leaders and stakeholders, equipping them with the information they need to make better decisions.
A risk report doesn’t just identify risk; it also describes its potential consequences, how it’s currently managed, and whether these efforts are sufficient.
This is important information that could affect a company’s health, its profits, or its ability to reach its goals. That’s why these reports matter, and why they need to be clear, concise, and accessible.
Why report on risk?
Wherever they are on the corporate ladder, everyone needs to be aware of risks that could affect their projects, responsibilities, and goals.
At the leadership level, risk reports help executives and directors think strategically and make big-picture decisions about the future of their organization. Managers benefit because they can settle on tactical ways to work towards those objectives. They can then share that information with their teams, to help them understand why they’re working in a specific way, or as a prompt for new ideas.
From the C-Suite to individual contributors, risk reports give people the tools to make better decisions and see how they can contribute. Once they understand the risks they’re dealing with, they can make choices from a place of knowledge, rather than intuition or preference.
Types of risk report
From small annoyances to existential threats, there’s risk at every level of business operations.
Since risks can affect single projects, whole teams, or the entire company, there are different ways to document them. They cover all kinds of risks, such as financial, strategic, and operational risks.
Project risk reports
A report on risks affecting one individual project. Examples of risks covered in these reports include rising equipment costs or a change in zoning laws that might hold back construction.
People working on the project might log risks as they come up, which could then be compiled into a weekly or monthly write-up by a project manager. Risks in a project report would usually be specific, immediate, and tangible. Think “we can’t find enough concession staff,” not “post-pandemic labor shortages.”
Program risk
If multiple projects make up one larger program, it might make more sense to report on their risks together. For example, a school might report on all the risks to its literacy program, such as a lack of funding or parental support, instead of creating one report for each classroom’s reading workshop.
If the risks affecting each project are similar, it could be a better use of resources to create one report that sums up threats to the program as a whole. This report could be created by gathering information from each project leader, then compiling key findings into a single document.
Portfolio
In the financial industry, “portfolio risk” describes the combined risk of all investments in a portfolio. But other types of businesses make portfolio risk reports, too. In that context, a “portfolio” is all an organization’s projects and programs.
This kind of report makes it easy to see if there are any common themes among risks affecting different areas of a business, or if they interact with each other across programs. A portfolio risk report might reveal that many different projects are having trouble finding staff, for instance. That could reveal that labor shortages aren’t an isolated problem, prompting leaders and stakeholders to consider them in a more proactive, holistic way.
Business risk reports
Risks outlined in these reports could affect a business’s ability to operate normally, or even exist at all. A business risk report might include cover core functions like staffing, critical systems for payroll or communication, or even the premises in which the business is housed.
These are business-wide challenges that are not specific to any one project or program, and likely wouldn’t be captured in a portfolio risk report. This report might also include emerging risks, like disruptive trends in the marketplace or among competitors, and external ones like natural disasters.
What makes a good risk report?
Now that you understand what it does, here’s what goes into writing one.
Here’s a breakdown of what to include for each risk:
- A description of the risk
- Data or evidence that proves its existence (with an external link if appropriate)
- The risk’s potential impact on business goals and objectives
- How the risk is currently being managed, and whether those efforts are adequate
- Suggestions for, or questions about, a future plan of action
To make your report as useful as possible, follow these simple writing tips.
- Be concise: Include too much information, and you’ll overwhelm your reader, leaving them confused about why the risk matters and how they should react.
- Format your report so it’s easy to read: Choose a clear title, and sub-title all sections or columns. If your report is on the longer side, include a table of contents and start with an executive summary.
- Make it timely: Non-urgent risks get ignored. Be specific when you’re describing the risk — when could these impacts come to pass? When do you need to take action?
Still feeling stuck? Try out our risk report templates for Trello, Notion, and Google Docs.
Risky business
If you’ve made it this far, you’re well-prepared to tackle the wide world of risk reports. While there are a million dangers out there, the goal of a risk report is always the same — to share information about possible threats in a clear and engaging way.
With the steps in this article and maybe a template or two, your reports will surely help your boss avoid all kinds of potential disasters.