What is a risk?

In everyday language, you might think of risk as uncertainty - the possibility that something could either go really well or really badly. A risk could be something you worry about.

Risk can be defined as:

'the combination of the probability of an event and its consequence'

(Institute of Risk Management, 2002)

'uncertainty of outcome, whether positive opportunity or negative threat of actions and events. It is the combination of likelihood and impact, including perceived importance.'

(HM Treasury,  The Orange Book, 2004)

What types of risks affect the FCO?

Our risk management focuses mainly on 'negative threats' to the delivery of our objectives, or smooth running of our operations.

We categorise risks under two main headings:

• Operational risks, which we define as those associated with the FCO's operations or service delivery functions.
• Strategic risks, which we define as those associated with the delivery of the UK's Departmental Strategic Objectives.

Why do we need risk management?

With good risk management, we are more likely to deliver our objectives fully, efficiently and effectively.

This is because risk management helps us to:

• make better-informed decisions
• allocate resources effectively
• suffer fewer surprises
• protect and enhance our reputation
• safeguard our people and assets
• run smoother operations