May 2023
Teresa Clarke explains how TARA can help you understand and manage risks when making
business decisions.
The TARA framework is a tool that can be used to assess and manage risk. It enables us to classify risks into two variables, the likelihood or probability of it happening; and the impact of it happening.
Likelihood or probability means the chance of it happening. The likelihood of it raining on a cloudy, overcast day in December is high. The likelihood of it raining on a sunny day with blue skies is August is low.
Impact means the effect that it will have on the business. Getting rained on while out for a walk will have little impact or effect as we can dry off when we get home. Getting rained on when we are studying in the garden with our computer, phone and all our books out may have more impact as all our books, computer and phone may get damaged and need replacing.
The acronym TARA means:
Transfer
Avoid
Reduce
Accept
To transfer the risk means that the risk is shared with or transferred to another person or business.
To avoid the risk means the risk should be avoided completely.
To reduce the risk means reducing the risk to an acceptable level.
To accept the risk means that the outcome is more important than the risk.
To use TARA to assess a risk, we need to look at the framework in a diagram.
There are different designs of this framework, but once you understand the concept you will be able to assess the risk using any of these designs.
You might like to draw your own version of this, so research it online first and pick a style that makes sense to you. Use colours to remember it, too.
An example
A company has been offered a substantial new contract to manufacture a specialist medical product. However, they do not have the relevant expertise to manufacture the product in line with current legislation. If they go ahead and make the product, they may be prosecuted for failure to meet legislative requirements (the law) and suffer heavy fines or penalties, which could put them out of business.
There is a high risk of being prosecuted if they go ahead with the contract and the result or impact will be heavy fines.
Looking at the TARA model, we can assess that the likelihood of this happening as high, and the impact will be severe or high too.
The TARA framework illustrates that this project should be avoided as the probability or likelihood of failure and the impact should it fail are both high.
If you enjoy my way of explaining things, you might like my workbooks, which are all available from Amazon in both paperback and as eBooks.
The links to all my workbooks can be found here: https://www.teresaclarke.co.uk/.
- Teresa Clarke FMAAT
