Monday, October 18, 2010

Decreasing Company Weakness Through Risk Management

Risk management is the process that is performed by an organization in order for it to identify, assess and prioritize the risks that might be encountered in the business or on a project. Coordination and economical application of the supplies or resources are also part of this strategy, which will help in minimizing, monitoring and controlling the probability as well as the impact of the adverse events. This also helps in the maximization of the realization of the opportunities which can aid the business grow and develop into a more successful organization. Risks are considered to be a part of the business world and they can either have a positive or negative effect. Actually, risks are not dangerous. They are called such because they pertain to the uncertainty of a particular activity or on the objectives themselves. When the risks become perilous to the company, they are then known as threats.

Risk assessment will have to focus on various things including financial markets and their vagueness, project failures, credit risk, legal liabilities, accidents and natural causes. You should also not forget that there might be adversaries that will throw deliberate attacks to your company so make sure that you also include them in your disaster management process. Now, each company can have different tactics and systems for the implementation of risk assessment. Aside from that, there are also definitions and goals that you may have for your risk assessment program and these differ from the other organizations with the same program as yours.

Strategies for the risks evaluated also vary but there are common techniques being utilized today. Among them are the tactics to transfer the risks to another party, reduce the negative effect of a particular risk in the business, avoiding the risk and to simply accept the consequences that might affect the company. Risk assessment however does not guarantee the success of the firm. Still this can be used to gain confidence in the estimates and the decisions that you have made especially since you will usually find that the choices that you have sided with are correct most of the time.

As mentioned, risk assessment involves prioritizing the risks in your business so this means that you will have to make a list of the known risks that might become threats in the future for your organization. After you have made such list, you will need to prioritize them by order. The risks with the greatest loss as well as those with the greatest probability of occurrence are those that should be handled first. The problem is that it is quite difficult to follow the process mainly because there is a need to balance the risks and at times everything can be mismanaged.

Various types of risk assessment include intangible risk, relationship risk and process engagement. Intangible risk evaluation is all about the risks that will surely hit the company but the organization has failed to notice them. Relationship risk assessment is for giving corrective solutions during ineffective collaboration while process engagement is for useless operational procedures. Risk assessment enables the risk managers to create instantaneous value from the reduction and the identification of the risks that have the possibility to reduce productivity.

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