Risk Management


By Jason Gluckman


Every business carries an element of risk. Therefore, managing risks is crucial process in many organizations. Depending on the business, steps can be taken to reduce the frequency and intensity of risk. Risk management is a process or group in an organization that takes management action to reduce risk. This activity involves the process of measuring and developing strategies to manage the risk. The strategies employed include transferring the risk to another party, avoiding the risk, reducing the negative effect of risk, and accepting some or all of the consequences of a particular risk.

There are two kinds of risk management. Traditional risk management is focused on risks stemming from physical and legal causes like natural disasters, accidents, death or lawsuits. Financial risk management focuses on risks that can be managed by using traded financial instruments. Large corporations employ risk management teams while smaller corporations practice informal, if not formal, risk management techniques that are rolled into the responsibilities of operational managers. Risk managers recognize and review their organizations loss exposures including property, liability, personnel and net income. This helps promote growth through profit, continuous operation and stable earnings.

The function of risk management is to organize and carry out a plan to control or reduce the risks to which a firm is exposed. This planning involves a five-step process. The first step is to identify potential risks. The method of identifying risks may depend on the organizational culture, industry practice and compliance. Once risks have been identified, the next step is to assess the potential severity of loss and probability of occurrence. The third step is to find a potential treatment for the problem. This may involve the transfer, avoidance, reduction or retention of a potential risk. Next is to implement the plan by choosing the right method of treatment. Prior to implementation, a review and evaluation of the plan is necessary.

Initial risk management plans are never perfect. Practice, experience and actual results, will necessitate changes in the plan. Therefore, the plan should make room for flexibility in decision making. Risk management is considered an art in management circles and experience and exposure to situations helps mastering this art.

Risk Management provides detailed information on Risk Management, Risk Management News, Enterprise Risk Management, Risk Management Software and more. Risk Management is affiliated with Product Design And Development.


More Resources

Unable to open RSS Feed $XMLfilename with error HTTP ERROR: 404, exiting

More Management Information:

Related Articles


Write Winning Proposals For Venture Capitalists
You need to secure money for your project. You visit venture capitalists to see if you can get that money.
Management Training: Are You Satisfied With The Results?
If you're not satfied with the results of your management training programs, maybe it's because you handle training as a 'one shot' event rather than a process of developing your people to be better managers.One of the common misconceptions is that a manager can take a course and voila he is now skilled in communicating with others, or managing his time or delegating work.
Tales from the Corporate Frontlines: The Organizational Structure of Our Growing Business
This article relates to the organizational structure competency, commonly evaluated in employee satisfaction surveys. It shows how structural concerns can affect the typical employee workday, as well as feelings towards your organization's management hierarchy and reporting structure.
ISO 9001 and Total Quality Management
Total Quality ManagementTotal Quality Management, or TQM, has become one of the most frequently discussed topics in current business literature. Because of the competitive pressures created by Japanese companies, quality became a competitive weapon in the 1980s in most industries.
Enable Continuous Improvement of IT Services through ITIL
One of the major benefits, if not THE benefit of process orientated approaches to managing your IT services and infrastructure is that it enables continuous improvement.This means that you are never totally satisfied with the current state of affairs and that you always want to improve your services.
Building Shareholder Value Through Your People
Increasing shareholder value is the most important driver for organisations in the modern business world. Shareholder value is built through growing profit and building confidence in the organisation, which moves share prices upwards.
Knowledge Management - Lessons Learned and How To Identify Them
Many organisations use the term "lessons learned" to describe the way in which they avoid repeating mistakes, or ensure that they build on past successes, yet a lesson can only be applied if it has been successfully identified, and captured first. Even in "learning organisations" who profess to be good at knowledge management and knowledge sharing, the process for identifying lessons learned can lacks rigour or depth.
Guidelines For Conducting A Good Meeting
Okay, so you've figured out what kind of meeting is needed, you've planned well and you have all the right materials. How about the meeting itself? How can you be sure the meeting you've so carefully planned and prepared actually comes off as expected?The checklist below can help you through the process.
Christmas and Business Gifts for Your Clients and Employees!
Tis' the season for business and corporate gift-giving! If you believe in the law of reciprocity, and if your business is the least bit successful you must; you know that giving back is not only the right thing to do, but it's very smart business as well. Let's look at some of the benefits and mechanics of Christmas and holiday gift-giving.
You Didnt Use Brainstorming to Select Your Measures, Did You?
IntroductionWhen Alex Osborn invented the creativity technique called brainstorming, I wonder if he had any idea just how extensively business would apply it. Almost every meeting employs some kind of brainstorming event, but there's one meeting that really should leave it off the agenda: the performance measure selection meeting.
How to Coach Your Employees - 5 Simple Steps Anyone Can Do!
Want to get more from your people, but you don't know how? Are you up for a small challenge and prepared to do things a little differently? If so, we have five changes to your style that you will find easy to incorporate into the way you work and your people will love you for it; you will have more time and your business will flourish.Think about it - is that not worth just the little effort required?Stop Fixing ThingsNext time someone comes to you with a problem in your business, STOP, before you give the solution and try the next step.
How to Hold Effective Staff Meetings
Many people believe that they conduct effective meetings, when all they really do is host a party. Or worse, they deliver a monologue.
Resolve Differences
Resolving conflict doesn't come easily to too many people. Most of us want harmonious relationships and smooth interpersonal interactions.
The Power of Positive Communication
Communication is the key to your success at work, at play, and at home. Here are six tips that will make a difference in your life:1) People judge others by their actions.
Making Your Workers Your Partners
There is an inherent conflict between owners and managers of companies. The former want, for instance, to minimize costs - the latter to draw huge salaries as long as they are in power (who knows what will transpire tomorrow).
Magnificent Meetings - 5 Tips for Success
Your impact at meetings will determine in a big way how well youdo in your career. In other words you will rise as high as yourcommunication skills will let you.
The Power of the Contract in Performance Management
An essential step in managing the performance of salespeople is that of establishing a sound and agreed contract between manager and the salesperson. A contract in this context is simply an agreement between the manager and the salesperson as to how best they are going to work together.
Are you NICE or do you CARE?
Are you NICE or do you CARE?Most people and most managers want to be nice. After all, it's easier to be nice than to not be nice.
Innovation Management - Producing Great Products, Motivation
Creativity can be defined as problem identification and idea generation whilst innovation can be defined as idea selection, development and commercialisation.There are other useful definitions in this field, for example, creativity can be defined as consisting of a number of ideas, a number of diverse ideas and a number of novel ideas.
Commercial Collections Billing Practices Advice
Swiftness is the key to collecting past due commercial accounts because commercial accounts depreciate more faster than consumer accounts.In creating and implementing a billing system, a credit grantor should recognize that time is the safest refuge of any debtor.