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Risk Management
Risk management means to identify and
assess the risk to minimize, monitor and
control the probability of that risk.
Risk may come from any direction e.g.
fall in price or financial markets,
failure of the project, liabilities,
credit risk, accidents, natural causes
and disasters. Risk management requires
consistent monitoring of situation to
identify the possible threats and to
minimize the effect or to avoid the
negative consequences by transferring
the risk to another party or by checking
the cost effectiveness of the project or
by preventing the sources of negative
consequences in the project. In a whole,
risks can be well managed by assessing
the vulnerability of critical assets to
specific threats, pointing out the
threat, detect the ways to reduce those
risks and take the reductions measures
depending the changing situation and
current resources.
Risk management is based on several
principles like it should be a basic
part of organizational processes, it
should be a part of decision making
which will deal with uncertainty through
systematic and structured decision
taking depending upon the best
available information. It should also be
transparent and inclusive as well as
interactive and responsive to changes.
Risk management is based on a scientific
and specific process by which one can go
through any project to determine the
risk involves in it. The process is
consisted of Identification, Planning,
Mapping out the social scope, frequency
and affectivity of risks, Working within
a framework, Developing an analysis and
Reduction.
Identification :
Identification includes source analysis,
Problem analysis, Objective
determination, Situation recognition,
Common risk checking, Listing the risks
and their probable effects.
Assessment :
Once the risk has been identified we
have to determine the severity of that
risk and the probability of its
occurrence. After this we have to
organize a risk management plan. This
risk management plan will have the
vulnerable property and its statistical
data, the risk probe depending upon the
timeframe, the potential resources and
approximate amount of loss and the
necessary decision to be taken in
different situations. Method to follow
in there will be the multiplication of
the Rate of occurrence by the impact of
the events which will give out the total
RISK.
Theses risks can be dealt with by
avoiding or eliminating the risk, by
mitigating or reducing the risk, by
transferring the risk or by accepting
that risk. The risk management plan
requires a purpose applicable and
effective security controls for managing
the risks. A schedule for control
implementation and responsible persons
for those actions are the prerequisites
for an ideal risk management plan.
Implementation :
Then time comes when these measures have
to be implemented in the organization.
These implementation and observation are
essential to flexible decision taking
and managing the risks to acquire the
company’s long term goal.
Limitations :
Risk management’s limitations mostly
depend on improper assessment or
prioritization of risks. Spending too
much time in assessing and managing may
bring in a devastating result. Again
this risk management is very much
dependent on flexible and instant
decision making. It is also essential to
know the distinction between risk and
uncertainty to ensure an effective risk
management plan. |
