What is a common mistake in risk management?

Focusing solely on past incidents is seen as a common mistake in risk management because it can lead to a narrow perspective that fails to account for emerging risks and changes in the environment. When risk managers concentrate only on what has happened before, they may miss new threats that could arise due to evolving business contexts, technological advancements, or changes in regulations and market dynamics. Effective risk management requires a forward-looking approach that not only reflects on historical data but also integrates predictive analysis and scenario planning to identify and mitigate potential future risks. This comprehensive understanding helps ensure that organizations are prepared for a wider array of challenges and can respond adaptively to unforeseen issues.

In contrast, when risk assessments are regularly updated, it supports an adaptive and responsive risk management strategy. Involving stakeholders enhances the process through diverse perspectives, while overestimating minor risks can divert attention and resources from significant threats.