Today, let's learn about risk management and all that it entails especially in an organization-based setting, risk management is a process of firstly, being able to identify then asses, and control existing threats to the capital and earnings of an organization. These risks come from different sources, they include financial uncertainties, technology issues, legal liabilities, accidents, and natural disasters.
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With a successful risk management program, an organization would be able to consider the full range of risks faced, risk management also helps with the examination of the existing relationship between risks and the cascading impact that it could have on the strategic goals of the organization.
A good approach to risk management is enterprise risk management, in this process, emphasis is laid on anticipating and understanding risk across an organization.
There is also an availability of positive risks, there are opportunities that could increase the business value or damage an organization if it is not taken, the aim of a risk management policy or program is not to eliminate all the risk involved, but it is to preserve and add to enterprise value by making smart risk decisions. The essence of risk management is not so that we can completely avoid risks, but we manage risk so that we are able to understand the risk types that are worth taking, and the ones that will get us to our goal. This means the risk management program should be intertwined with organizational strategy.
Organizations need to analyze risk management more important now than ever, the modern organizational risk has grown to become more complex and is accompanied by the rapid pace of globalization. New risks are emerging consistently, and new ways to tackle this technology through risk management options have to be studied consistently as well.
- Risk identification.
- Carefully analyze the possibility of an impact on each of the risks.
- Prioritize the risk based on existing business objectives.
- Monitor the results properly and adjust necessarily.
The described steps are straightforward, but the risk management committees should not underestimate the required work to complete the process.
With risk evaluation, organizations are helped to determine the response to the risks they face, some of the techniques used include;
- Avoiding the risk.
- Mitigating through the risk.
- Risk transfer or share.
- Risk acceptance.
Risk treatment is the step involved in the application of the agreed-upon controls and processes and then confirming that they would work as planned. After adequate treatment, it is also important to monitor and review in order to prevent future occurrences.