Risk Management: Describe principles

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Risk Management in an Organization

The risk is a viewpoint of getting hurt, but as a discipline of risk management, it is more than the concept of danger or getting hurt. This can be understood with an example of business risk that means opportunity for gain as well as loss i.e. achieving a result that is different than expected. The term risk varies according to the domain it is applied. Risk differs prominently in business concern and in individual concern. The term risk postulates a number of aspects. Delineating risk in an appropriate manner is quite difficult, but it can be broke down into two constituents that likelihood and affect.

Whenever a risk event is deliberated from the perspective of likelihood, it is meant that do you think it is risky or not. For instance the likelihood that the earth will be collide with a comet in the next hundred years is almost nil, so this prospect will be viewed as a low risk event and on the other hand, if we come to realize that the earth is actually collide with a comet, this event will furnish disastrous effects as all human life would probably stop. In depicting a risk event, it is of significant importance to elucidate whether the principle concern associated with a risk event is with likelihood or impact as it will help us in resolving it in an appropriate manner (Frenkel, Hommel, Dufey & Rudolf, 2005).

Risk management is the process by which individuals, organisations and associations can evaluate and handle the risks in conformity with their overall business objectives (Frenkel, Hommel, Dufey & Rudolf, 2005). Particularly, risk management follows subsequent activities:

? The first and the foremost activity in this direction of risk management is the mission identification that embraces goal- and policy-setting.
? The second action is the risk and uncertainty assessment that involves identification, analysis and measurement of risk.
? Subsequent action involves risk control along with abolition, averting and reducing, precluding and managing risk.
? The next action in the process of risk management is risk financing that involves measures for addressing the financial effects of risk.
? The concluding action in this direction is the programme administration that embraces steps regarding implementation measures along with review and monitoring (Chapter 1 Risk, Uncertainty and the Management of Public Risk, n.d).

In concern to an organization, the concept of risk is an event that may have an effect on the profit and growth of the organization. An organization can be defined as an endeavour in which financial, material and manpower resources are brought together in a planned way to achieve exclusive strategic objectives within the given restraints of cost and time (Chapter 1 Risk, Uncertainty and the Management of Public Risk, n.d). The objectives may be qualitative or quantitative or both. Organizational risk pertains to tentative events or positions that can unfavourably affect an organization in terms of cost, schedule and product quality (Risk Identification, 2007). In regard to an organization basically risk is a function of event, likelihood and probable damage.

In regard to an organization risk can be viewed in following two concerns:

? Risk is principally concerned with bad things happening and taking form of loss or injury.
? Risk is a reflection of information available to make good decisions.

With this second concern of risk, we can confer that the concept of risk in concern to an organization is highly associated with the amount of information that is available to make decisions. Information available to executives for making their business decisions can confer them from making wrong decisions that will eventually lead toward risk. If the amount of information available to make business ...