Most organizations must address a variety of situations that involve risk. Compliance with risk management practices is, therefore, a key element of the survival of any organization, whether it’s traditionally considered “high risk” or not.

At the core of any successful risk management strategy is training. Other business practices are, of course, important — but many adverse events can be traced back to unmet learning needs. As a result, the learning and development (L&D) function plays an important strategic role in the mission of any organization.

The nature of risk can take many forms for a company, depending on the nature of its business. The Organizational Risk Typology categorizes these risks, enabling organizations to better understand them and address them through training. The model is based on the organization of risk into four categories:

  • Physical risk: risk to people, including employees and/or customers.
  • Material risk: risk to things the company owns or controls.
  • Operational risk: risk to processes that are internal to the company and/or required for day-to-day functioning.
  • Product/service risk: risk to both sources and targets of revenue.

The intersections of these categories give us these four types of risk:

  • Risk to clients and customers.
  • Risk to the employee workforce (i.e., human capital).
  • Risk to tangible organizational resources.
  • Risk to intangible organizational resources.

The Organizational Risk Typology is based on multiple studies conducted by Training Industry, Inc. To learn more about the model and the training organization’s role in risk management, purchase our white paper series “Training Strategies for Safety and Risk Management.”

Typology of Organizational Risk

Related Content: