Write an essay on Risk management.
Risk management is the process using which risks in a company or organization are identified, detected, mitigated, tracked and actions are taken to reduce it. This also involves maximizing the occurrences of positive actions and events and reduction of the occurrences of adverse situations. Various studies show that this genre of risk management is majorly overlooked by most of the organizations. IT projects, runaway projects and various short term events think it is an extra investment and can be avoided (Williams, 2004).
Here we are today devising an ideal risk management plan for this registered trade organization. It is for all those executive directors, managers, senior staff and other officers in concern. It acts as a guideline to give a step by step approach for detecting potential risks, assessing its impact and managing it from happening.
What is a Risk-Commonly one might think risk as anything that can go wrong in the operations in the organization. By definition, however, risk involves potential threats for achieving organizational goals and potential opportunities for fetching these goals. With the changing internal dynamics in an organization threats and opportunities come and leave. With this changes the relationship with stakeholders as with risks external environmental factors also change. So being abreast of risk must be a continuous activity. Risk management is a very good business practice which can assist one in facing ranges of compliances, statutory, government and organizational requirements. (Barker, 2013)
Compliance risks – These are risks which are related to the corporate and legal obligations of an organization which it fails to meet. These risks are related to accounts, reports, licensing, and relations at workplace or health and safety conditions at workplace. The compliance risks of these types are considered to be having a low tolerance. It is true that organizations must comply with such obligations. Risk management keeps things in control.
Organizational risks-The organizational risks are those which occur when any organization fails to meet the goals it has set. These can be a set standard for service delivery, level of delivery, meeting expectations of stakeholders etc. These risks if not met can lead to a reputational loss along with loss in turnover.
Opportunity risks-Opportunity risks arise from an opportunity. They are also termed as positive risks. These help the organization to achieve its goals in a better way. Considerations are made for such kind of risks as they lead to potential profits.
Risk management plan for a registered trade organization
Identify risks – First identifying the areas where risks might occur is undertaken. It is also analyzed whether the organization has the measures to combat these potential risks in compliance with their employment equality and safety or health legislations at the workplace. If it has then how good are these procedures and have they worked positively in the past. Analyze when these risk management measures was reviewed last and where their weaknesses and loopholes are.
Assess risks – It is crucial that one detects the impact of risks in the organization if it occurs. The legal penalties involved for not having a safe and healthy environment at work must be analyzed. One must also consider the loss of reputation in the matter to occur if it is not managed properly.
Managing risks – Managing risks involves developing certain steps and revising them at timely intervals. In the context of the above points a framework is made where certain changes are made to fill the gaps and weaknesses. Regularly such plans must be reviewed to analyze whether the organization is still protected from potential risks or not.
Establish the idea – The main purpose of the first step is to identify what is the scope of various risk management activities. These comprises of all internal and external environmental factors also. One cannot begin risk planning unless one is aware about the objectives of the organization. So one must confirm the organizational goals first. The next most roles come for the stakeholders. Stakeholder’s risks are crucial in determining a solid risk management plan for an organization. These are the people who will either gain or lose depending on the plans made or programs undertaken by any organization. The risks of these key people in a company must be analyzed with utmost details. Risk assessment criteria must be set. (Samuel, 2010)
Risk assessment – It is at this stage risks are identified, analyzed and evaluated. The main purpose is to identify all the sources, causes and types of risks an organization is exposed to. In relation to identification of risks there are 3 tasks – 1) Identifying risk categories 2) Identify risks 3) Identify the pre set risk management policies
There are many ways how you can identify risks in an organization.
One to one interview with managers relevant to the organization and officers is a way. In the interview technique a Risk Identification Form is considered where information is recorded. One must make sure these interviews are conducted with the people in the organization who are responsible for the outcome of the relevant activities for which risk management plan is being designed. These forms are sent before hand for allowing interviews to consider all kind of risks.
Run workshops in relation to officers or managers which are facilitated by the Risk Management Coordinator. In the workshop approach the various categories of risk is identified and the framework is discussed. By working with this risk list one can undergo a disciplined discussion and ensure nothing is neglected or overlooked. One can choose an approach for identifying risks which suits best for the organization.
A summary of response and impact An inspection checklist is made which is ensured by the marquee installer. This checklist is submitted to an event organizer and a process is developed where the marquee is dismantled. On the event of an unacceptable wind speed a risk of a collapse is quite acceptable.
Actions proposed
â— The marquee company must be contacted and advice is given for completing it and submitting it to an event organizer once the marquee is set up.
â— A procedure is to be developed for dismantling the marquee in the response of an unacceptable wind speed.
Requirement of resource
â— Event organization
â— Access to computers
â— Telecommunication
Responsibilities The event organizer is responsible for contacting marquee company, collect the completed checklist in the installer and develop dismantled procedure. The company must be communicated in relation to the wind speed which is acceptable.
Timing
â— Before the event the procedure must be completed.
â— The marquee company must be notified for the requirement of checklist within a month before the event.
Monitoring and Reporting
â— The event organizer will remind the marquee company about the requirement of the checklist in 7 days time within the event.
â— A complete checklist can be obtained from the installer instantly for building the marquee.
(Northam, 2010)
Commercial relationships risk management or credit risk management is one of the most important areas of financial institutions irrespective of what their nature is. Banking sector, commercial sector and investment both are used for assessing relationship in between profitability and credit risk management. (Li,2014)
An economic risk is those macroeconomic conditions like government regulations, exchange rates or instability in politics which all affects investment in a foreign country. Since these are external factors and we do not have a control on them, organizations which deal in products and services dependent on such external conditions must have a strong risk management framework in place.
Behavioral risk management of human resource risk management is a protocol which is attempted in response to a planned comprehensive approach for various behaviors which leads to violence or hostility in a workplace. It is quite difficult to speculate violence or hostility in behavior. These methods make sure to identify what are the risky conditions or acts that can lead to behavioral risks in a workplace. Such individual risk can arise from:-
Conflicts – A conflict is a disagreement which is a normal argument which does not be harmful for an organization. Ideas, opinions and concepts can have conflicts at a workplace.
Nuisances – A conflict turns to be a nuisance when it is associated with negative gestures like passing offensive jokes, racial languages, graffiti’s, gestures, angry outburst, and silence unnatural and blame games. (Anonymous, 2005)
Natural disasters are now more frequent than before. Such natural risks also cause economical losses and financial losses. The increased concentration of people and property exposed in areas close to natural resource is also increasing risk from the disasters. Such natural occurrences affect growth and the entire economy. (Laframboise, 2015)
Political risks are needed to be identified and must be managed. They need to be classified in terms of firm, country or the globe.
Firm specific risk- These are micro risks which affect a MNE for a corporate level or political level. If there is conflict between MNE and the government then it is known as governance risk.
Country specific risk- These are macro risks which are also political risks which affects MNE at a corporate level. These country specific risks are either institutional risks or transfer risk.
Global specific risk –These are risks associate with the MNE which originates at the global level. (Anonymous, 2015)
There are many reasons why organizations are performing risk assessments. These give an assurance that there is total control in place over an organization. When an investment decision is made by an entity it means exposing itself to numerous financial risks. The reach of such risks or depth is dependent on the kind of financial instrument used. These risks can be a kind of high inflated prices, volatility in the capital markets, bankruptcy, recession etc.
References
William, L. (2004), Risk Management, agile.csc.ncsu.edu
Samuel. (2010), Risk Management for Not-For-Profit Organisations,Volunteering.nsw.gov.au
Anonymous, (2015), Political Risk Assessment and Management, Aw-bc.com
Li., F. (2014), The Impact of Credit Risk Management, Diva-portal.org
Laframboise, N. (2015), Natural Disasters: Mitigating Impact, Managing Risks,
Anonymous, (2005), RISK MANAGEMENT FRAMEWORK, Australian Capital theory
Barker, (2013), Risk Management Strategy, Sheffieldccg.nhs.uk
Northam, (2010), Risk Management Plan, Northam.wa.gov.au
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