Risk management essay
risk management essay
Risk and uncertainty are terms basic to any decision making framework. Risk is imperfect knowledge where the probabilities of possible outcomes are known and uncertainty exists when these probabilities are not known. Uncertainty is therefore imperfect knowledge and risk is uncertain consequences. Uncertainty is central to all projects and that uncertainty management is a more descriptive term of the risk management process, and more appropriate for managing the sources of uncertainty that includes risks, threats, and opportunities. Ambiguity is associated with uncertainty in the interpretation of variable data sources influenced by the behavioural constructs of those involved in the process. Clarification and hence management of ambiguity and uncertainty, improves the effectiveness and efficiency of decision making. This management process is mirrored within a project environment.
The conventional stages of risk management are typically represented by a six phase approach namely: risk management planning, risk identification, qualitative risk analysis, quantitative risk analysis, risk response planning, and risk monitoring and control.
– Disappointment in financial risk management takes various structures, the greater part of which are exemplified in the present emergency. For instance, risk appraisals are regularly taking into account chronicled information, for example, changes in house costs after some time. Yet, fast financial advancement, including securitized subprime contracts, has made such information untrustworthy. Also, a few risks are missed on the grounds that they are covered up in excessively complex reports that leaders cannot get it (Stoian & Stoian, 2016). [tags: Risk management, Risk, Management, Finance]
– As a result, the topic of ‘risk management’ can be related to a biblical passage in The Book of Ecclesiastes, Chapter 11:5-6. According to Solomon, “As thou knowest not what is the way of the spirit, nor how the bones do grow in the womb of her that is with child: even so thou knowest not the works of God who maketh all. In the morning sow thy seed, and in the evening withhold not thine hand: for thou knowest not whether shall prosper, either this or that, or whether they both shall be alike good” (2009, p. [tags: Management, Risk, Moses, Risk management]
Risk management is the coordinated activities to direct and control an organisation with regard to risk. (ISO Guide 73:2009, definition 2.1)
Thus risk is the effect of uncertainty on objectives. Typically projects have a variety of objectives. For example typically construction projects have objectives related to time, cost, quality, safety and environmental impact. The uncertainty involved may come from a variety of sources. It may be the result of some inherent randomness regarding the factor involved. For example it is difficult to predict the weather. It may be the result of a lack of information that can be rectified by some investigation. For example the uncertainty in the proportion of soil and required for an excavation. It may be because the factor is under the control of somebody else. For example, will a negotiation be successful, and how long will it take to resolve. However, basic principles for dealing the resulting risk are the same. Sometimes there are legal requirements of analysing and assessing risk, particularly in the occupational health and safety area and in environmental issues. These legal issues will not be covered, however the approach discussed should be applicable to any specific legislation.
Internal and external environments of an organization pose a wide range of risks to an organization and managers should establish strategies to manage risks for the long-term survival. Risk management strategies are enhanced by the culture of the organization and this can be maintained by inculcating a culture of good values, believes, norms and attitudes.
Burnaby, P. and Hass, S. (2009). Ten steps to enterprise-wide risk management. Corporate Governance, 9(5). p. 539-550.
Risk is the chance that the actual return from an investment may differ from what is expected. (Hickman, K. A., Byrd, J. W., & McPherson, M. 2013) Risk management discipline has evolved and expanded over the years and has shifted the focus from financial risks to a broader perspective with strategic risks. (Bugalia, J., & Kallman, J. 2012) Risk management involves; organizing, planning, controlling, leading and allocating resources and make decision for the organization for a success path. To achieve
. 3 2. THE CONCEPT OF RISK. 3 2.1. Definition of Risk. 3 2.2. Types of Risk. 3 2.3. Risk Assessment. 4 2.4. Risk Management. 5 2.5. Uncertainty Influences
threats/attacks many things must be taken into consideration because there is always a deeper internal issue in what we believe is secure. Risk assessment and risk management are both very important parts of planning to create a safe, secure work environment to protect my employees and company both on the inside and outside of the company. I would assure that my company conducts a risk assessment periodically. This helps to see what has failed in the past versus what improvements and corrective actions have been…
overburdened by many complications and uncertainty, resulting in more risk and can be found in all the fields of human activities. Risk can be defined in many ways depend upon the situations and time. General risk can be defined as risk is a likelihood or risk of harm, damage, obligation, loss, or whatever other negative event that is brought on by outer or inner vulnerabilities, and that may be kept away from through preventive activity. Risk does not mean an approaching negative impact; it is an adversely…
Risk management is one part in information security. All managers are expected to play a role in the risk management process, but information security managers are expected to play the largest roles. Before studying risk management detail we should have some idea on risks and difference between hazard and risks. Hazard is any source of potential damage, harm or adverse health effects on something or someone under certain conditions at work.
Acceptance is the choice to do nothing to protect an information asset and to accept the outcome of its potential exploitation. This may or may not be a conscious business decision.
(Tummala and Burchett, 1999) defined Risk Management Process (RMP) as a logically, consistent and structured approach to enumerate and understand possible risk factors and to assess their consequences and uncertainties.(Chapman, 1997) stated that a formal (RMP) should be applied at all stages in the project lifecycle by project owners and contractors. Alternatively, the process is referred to by many authors as (PRAM) Project Risk Analysis and Management. However, it is the author’s opinion that (PRAM) and (RMP) are similar terms for the same concept and can be used interchangeably.
(Charoenngam and Yeh, 1999) stipulated the importance of a proper contractual foundation to ensure successful project execution, especially in case of projects involving multidisciplinary teams.(Thompson and Perry, 1992) addressed the necessity of “model ” or “standard” sets of conditions of contracts where risk is allocated to different contract parties, but the principals behind this allocation have not been stated .
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Risk management is hugely important to every project to identify all the potential risks. An uncertain event or set of circumstances if it occurs, will influence the achievement of the project objectives, which could be detrimental to the project success. “Risk management is the process of identifying, assessing and controlling threats.” Our project had many threats, so I decided it was important to create a risk assessment identifying what our threats were, why it was a problem, what we are doing to prevent it, the likelihood of it occurring and the severity of the risk if it occurred. A major issue that I did find with the risk assessment I produced is that I did not consider the consequences and how to deal with a risk becoming reality. Looking at APM’s risk process model, it is clear that my risk assessment is lacking the stage of planning our response to the risks occurring. One of the risks I determined was potential technical difficulties. Technical difficulties often occur in projects and was definitely a threat to our group using Prezi presentation. I had never used or even heard of this software before, and as great and visually appealing as I thought it was, I was concerned about how time-consuming it would be to learn using Prezi as opposed to using Microsoft PowerPoint, a platform I am very confident navigating. However, understanding the risk, I considered it important to learn something new, and after spending considerable time on Prezi, I quickly became confident in using it. I am glad that our team didn’t let this risk detour us from using Prezi as it was very popular at the exhibition and enables us to stand out. In this case, I learned that taking a risk paid off and I will continue be use Prezi presentation in the future.
Risk Treatment and Contingency Plan: The next step involves preparing a risk treatment and contingency plan. It is vital from the perspective of enterprise risk management. What will you do if the risk materializes? Can you do something to overcome the risk? Can you take some measures to lessen its impact? You should think about all these questions and come up with a risk treatment and contingency plan for the same. It should include ways in which to control as well as overcome the risk conditions.
Risk Monitoring: This is not the next step as such, rather it is something that should happen on a continuous basis at all stages of the risk management process. Have a RMMM (Risk Mitigation, Monitoring and Management) plan in place for the same. You can also make use of certain risk management softwares for this purpose. At the same time, there should be proper communication between the different departments involved in the risk management process. Communication is vital because it can affect the entire process both negatively as well as positively.