How to Write a Clear Risk Statement (With Good & Bad Examples)

Risk statements fail to be meaningful when they’re vague, incomplete, or written inconsistently each time. In this article I look at common pitfalls and share the 4-W’s method that has served me well for over a decade.

Why Clear Risk Statements Matter

If you’ve ever read a risk register and thought, “What does this even mean?”, you’re not alone!

Most small and medium business (SMEs), not-for-profits (NFPs), and even government bodies struggle with inconsistent language. One team may write a single-word risk like “Cyberattack”, while another writes a paragraph, and another describes an issue rather than a risk… Now you also get the risk that CoPilot (or ChatGPT) wrote which totally misses the point!

The result?

• Confusing board reports
• Inconsistent risk ratings
• Poor decision-making
• Disengaged risk culture (“risk management is too hard”)
• AI tools producing unreliable outputs
• And a general sense that “risk is just paperwork”

The good news: writing a clear risk statement is actually simple once you know the structure.

The 4-W’s Method of Defining a Risk

This is the simplest and most practical way for SMEs and NFPs to write meaningful, consistent risk statements even if your staff don’t have formal risk training. It’s a method that I have employed through most of my career and I still train people with today!

The Four W’s help you describe the risk properly, not just label it.

1. What is it?

Clearly state the event, outcome or action that is the risk. Be as specific as possible.

• Weak: “We might go over budget.”
• Stronger: “There’s a risk the contractor could go over budget due to unexpected changes in scope.”

2. When could it happen?

Understanding timing helps prioritise your control / mitigation design. Could it happen every day, once a week, once a month or once a year? Could it happen only when a specific event happens or at the beginning of a project?

Having a clear understanding of the timing of the risk allows us to better assess the possible impact and design mitigations that are both effective in managing the risk and efficient in terms of the effort to control the risk.

3. Where could it impact?

Which part of your organisation, service, project, or operation could be impacted? Is the impact financial, operational, reputational, safety-related, or strategic?

Understanding where the pain lands helps with proper consequence ratings.

4. Why does it matter?

This is the heart of the risk statement! Some risks seem minor but can trigger serious downstream effects. Others look big but don’t impact anything critical.

When I was consulting I remember us referring to this as the ‘So What’ question - explaining why it matters helps boards, executives, and auditors understand why the risk deserves attention.

Putting It All Together

An ideal risk statement is a single, powerful sentence that answers the 4-W’s in a simple, readable way. When we have this as a foundation, assessing the risk, designing controls and monitoring the risk is a much simpler task.

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Good vs Bad Risk Statement Examples

Here are SME- and NFP-friendly examples you can use straight away.

Cyber Risk

Bad: “Cyberattack.”

Good: “A cyberattack caused by weak passwords resulting in data loss, operational downtime, and reputational damage.”

Cashflow / SME Finance

Bad: “Cashflow issues.”

Good: “A cashflow shortfall caused by delayed customer payments resulting in inability to meet payroll and supplier commitments.”

NFP Service Delivery / Client Safety

Bad: “Client harm.”

Good: “Client harm caused by inadequate supervision resulting in safety incidents and potential funding consequences.”

People / Key-Person Risk

Bad: “Staff resignation.”

Good: “Loss of a key staff member due to burnout resulting in service disruption and delays to core projects.”

Governance / Reporting

Bad: “Poor reporting.”

Good: “Inaccurate reporting caused by inconsistent data sources resulting in poor board decision-making.”

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Common Mistakes SMEs + NFPs Make (and How to Fix Them)

1. Using overly brief risk descriptions

These don’t tell you anything about the specific nature of the risk your are concerned about. This will almost certainly lead to differences of opinion about how significant the risk is and make it impossible to design controls to address it.

Fix: Use the 4-W’s to expand context.

2. Writing risks that are actually issues

Issues are current existing problems while risks are future events.

Fix: Ask: Has it already happened? If yes → issue, not risk.

NOTE: I’ve had many clients who don’t have mature issue tracking and reporting processes. If you’re in this boat as well, using the risk register to track issues can be a good approach due to the rigor around assessing the risk – when naturally lends itself to issues rating as well.

3. Adding controls inside the risk statement

Controls belong in their own section and when combined with the risk assessment inform the residual risk level. Putting control information in the risk description confuses the issue.

Fix: Keep the statement clean and descriptive.

4. Using jargon or technical language

Risk reports can be used by a broad audience. Boards, frontline staff or other users of the reports (e.g. banks) won’t necessarily interpret jargon the same way or understand it.

Fix: Write so that someone outside your industry can understand it.

5. Forgetting (or not defining) the impact

A risk without impact can’t be assessed.

Fix: Explicitly include “why it matters.”

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The StartRisk Recommended Template

After working through the 4-W’s, use this simple structure to ensure you have consistent and meaningful risk descriptions:

“[Event], caused by [cause], resulting in [impact].”

It’s clean, consistent, and works across all sectors, perfect for SMEs, NFPs, Boards, and frontline teams.

The cool part? This structure also works beautifully with AI. We’ve tested it across all the major models (Copilot, ChatGPT, Gemini, Grok) and they pick it up instantly. Because it’s so clear, the AI can actually understand what you mean and give you better, more helpful answers. It’s a simple tweak that makes AI tools way more useful.

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Where Good Risk Statements Make a Difference

By adopting the 4-W’s approach and following the StartRisk recommended template for risk statements you can expect to improve:

• Board reporting clarity
• Quality of risk ratings
• Audit and accreditation outcomes
• Control identification
• Incident analysis
• Consistency across teams

This is one simple but valuable way to lift organisational risk maturity and consistency!

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Try It the Easy Way — Using StartRisk’s AI Risk Platform

If you want to your organisation the gift of producing clear, standardised risk statements instantly, try the StartRisk AI Risk Platform.

You and your team can simply describe their situation in plain language, and the StartRisk AI Risk Tool will generate recommendations for:

• Risks with clean, structured risk statements
• Risk likelihood and consequence ratings

All of which are tailored to your organisations specific operating context and risk environment.

It’s the fastest way to bring clarity, maturity, and consistency to your risk framework.