When creating a Risk Profile of an organization – I will focus on software development company – you need to conduct following activities:
- Establish the organization’s risk appetite and risk tolerance.
- Identify potential risks in the categories vital for the organization (see below).
- Rank, or prioritize, based on the impact risks might have on the organization. Including the likelihood it might happen.
- Think about further prioritization including defined relevant subcategories.
- Present the risk profile in the readable way, e.g. through a color-coded heat map.
If you wonder how to distinguish risk appetite from risk tolerance, here is my understanding:
- Risk Appetite: How much risk you want to take.
- Risk Tolerance: How much risk you can handle without too much stress.
I hope it helps.
Now about those categories. In software development I usually go with the following ones:
- Operational Risks – project management failures, technical failures, resource allocation
- Financial Risks
- Market Risks
- Technological Risks – including cyber security threats
- Regulatory and Compliance Risks
- Human Resources Risks
- Strategic Risks
- Reputation Risks
Remember that Risk Profile changes over time! It needs to be regularly monitored and reviewed!