Risks management

Introduction

Risks management is becoming an area of development in many companies and institutions because of the prevalence of risks in today’s technology world.  The risk is the likelihood that something will happen and the extent of losing that arises from the activity of situation.

 The losses that occur from the risks can be direct or indirect.  Whether the losses are direct or indirect, they can result in speeding many resources to addressing them. It is thus essential to implement strategies that can help to make sure that risks are properly managed.

Major Strategies

Communicate and Consult

The communication as well as consultation is aimed at identifying the people that are responsible for the assessing risks, identifying, analyzing and evaluating including those who will be responsible for treating, monitoring and reviewing the risks. Those people ought to have an in-depth understanding of the basic decision-making as well as the reason why specific actions are in requirement (Culp, 2001).

Establish the Context

The establishing the context involves defining the parameters that should be taken into account during risk management and it is where risk scope and the criteria are set for the remaining process.  The process needs a deeper consideration and particularly the way it relates to the scope of the risk management process being used. The establishment of the context follows a five-step process according to Standards Australia and the Standards New Zealand (2004). The first step is the establishment of external context; next is the internal context, risk management context, development of a risk evaluation criteria and lastly defining the risk analysis structure.

Risk identification

The concept of risk identification is the basic step in risk management. Risk identification helps to reveal the potential risks that occur as well as the other events that do occur frequently. The investigation of risks takes place by looking at the activities of enterprises in all directions and then trying to introduce new exposures that may arise in the future due to the changes in the internal and external environments. The risk identification takes place correctly; that can ensure that risk management is effective (Tcankova, 2002).

Risk Analysis

The aim of risk analysis is to assess the potential effect of exposure as well as the likelihood of that particular outcome occurring. It is crucial to consider the effect of the risk in case it occurs under the elements of quality, resource, time and benefit. The risk analysis step helps to determine the probability and the result of a negative effect and then to estimate the level of the risk through combining the probability as well as the consequences (Erhorn, 2007).

Risk Evaluation

Before the probability of a risk is determined, risk tolerance needs to be considered. The enterprises consider the amount or risk that they are willing to take and making decisions between acceptable and unacceptable risk. Risk evaluation is crucial for making sense in particular situations and offers enough material for making decisions (Vrijling et al., 1995).  The aim of carrying out this step is to make decisions on whether to accept or to treat risks.

Risk Treatment

The risk treatment entails the selection and implementation of one or more alternatives for treating risks.  Risk treatment options that have been proposed by Standards Australia and Standards New Zealand include risk avoidance, change the occurrence likelihood, change the outcome, share the risk or retain the risk (a risk can be retained when it is at the acceptable level). 

Monitoring and Review

Risks monitoring and review are important, and they are integral steps in the risk management process. It is important to monitor risks so as to make sure that the changing environment does not change the risk priorities and also make sure that the risk management process remains effective in its design and operation. The risk management process should be reviewed at least once a year so as to make sure that there is the inclusion of new ideas to increase the scope of risk management (Iverson, D2013). The process of risk management is cyclic in nature and it integral to management. The critical success factors should be put in place to ensure that the risk management procedures are properly leveraged.

Conclusion

Organization is facing some risks according to the uncertainty conditions.  For that reason, the organizations emphasize on risk management. Also, effective risk management is helpful in increasing the success of projects. The process of managing risk entails risk identification, analyzing, evaluating, treatment, communication and consultation, monitoring, and controlling risks.  Risks are all around us, and the risk management process is becoming increasingly complex and decentralized. For that reason, companies need to develop the right strategies to make sure that risks are properly managed so that they can run in a risk-free environment.  The success of the risk management process is also having a common definition of risk and ensuring that everybody in the organization understands it clearly.

References

Culp, C. L. (2001). The risk management process: Business strategy and tactics. New York: J. Wiley.

Erhorn, F. (2007). Applied Risk Management Strategies in the field of M&A. München: GRIN Verlag GmbH.

Iverson, D. (2013). Strategic risk management: A practical guide to portfolio risk management. Singapore: Wiley.

Standards Australia and Standards New Zealand (2004).  Australia/ New Zealand Standard Risk Management AS/NZS 4360:2004. Standards Australia, Sydney/Standards New Zealand, Auckland.

Tcankova, L. (2002). Risk identification; basic stage of risk management.  Environmental 

Sherry Roberts is the author of this paper. A senior editor at MeldaResearch.Com in legitimate paper writing services if you need a similar paper you can place your order for custom college essay services.