A common mistake during risk management is to pick a problem that obviously needs to be solved, and then set out to solve it. This is called the "problem-centric approach." A related mistake is the "solution-centric approach," which is to become dedicated one solution. There are two main drawbacks of these approaches:
- the opportunity cost: the effort could have gone towards identifying and pursuing more important issues
- unforeseen consequences: e.g. some problems are not really problems; some solutions create more problems than they solve
The correct approach towards risk management is to integrate it with asset management, or else we missing the actions that are most crucial to the future.
- assess assets and risks — both those that already exist, and those which are potential
- enumerate the various solutions and their impacts on assets and risks
- assign priorities to these possible solutions. This is a more complex task than a simple ranking, because they interact with each other. For example, capacity building (which increases assets) may be preliminary to dealing with urgent risks.
- pursue the most urgent or important actions