PRINCIPLES OF RISK

Principles of Risk

Principles of Risk

HOMELESS INTERNATIONAL

Ans 1

Identification And Assessment of Risks:

Risk Identification Criteria

Risk assessment and elimination in the organization will attempt to safeguard the strategic aims of an organization by promoting negotiations between the internal and external stakeholders. In an attempt to link the strategic goals and the risks associated with it, I have chosen to make use of SWOT analysis. The analysis of a company's strengths, weaknesses, opportunities and threats with respect to its internal environment and the micro economical factors will help identify the key criteria of risks. The same has been presented in the table below. (Othman, A. Harinarain, N. 2012. Pp 4-6)

The Table shows how we have selected these three criteria based on recommendation of the experts and key managers.

Risk Identification Criteria

Risk Clauses

Reducing Strengths

Increasing Weaknesses

Reducing Opportunities

Increasing Threats

Funding Risks

50%

10%

100%

80%

Implementation Risks

50%

25%

 

 

Health And Safety Risks

50%

25%

 

 

Risk Quantification and Probability:

The Risk Quantification table on the other hand shows how these criteria have been quantified on the basis of research done by the company. The interview and survey based research was based on a Likert scale where 1 shows minimum and 5 relates to the maximum value. This research shows how each stakeholder considered the risk with respect to his individual expertise and experience. It gives the company a first hand to analyze the risk in light of its internal customers perspective. In the table, probability relates to the probability of occurrence and Severity relates to how crucial or critical that particular risk is for the concerned stakeholder. The result which is a product o probability and severity reveals the importance of these risks in a quantifiable manner.

Risk Quantification

Probability

Severity

Result

Risk Factors

Mean

Median

Mode

Mean

Median

Mode

P*S

Funding Risks

4.5

4.5

4

4.5

4.5

4

20

Implementation Risks

4

4

4

4.3

4

4

17

Health and Safety Risks

3.5

3.5

3

4.3

4.5

5

15

Risk Map

Having identified our key risk criteria we need to ascertain their evaluation. For this I have made use of a Risk map which shows what measures should be taken. A general risk map has been shown as follows:

High

Risk Mitigation Control

Risk Mitigation Control

; Close Monitoring

Immediate And Urgent Action Required, Constant Monitoring And Revision

Impact

Medium

Toleration possible; monitor

Develop Contingency Plans

Develop & Implement Contingency Plans; Monitor Closely

Low

No action needed

Minor supervision

Develop Contingency Plans

Low

Medium

High

Probability

In light of this map it is evident that finding risks must be catered to immediately and are the most critical. Implementation and Safety risks fall under high impact and high probability and therefore need adequate policies and consideration.

Risk Register:

The Risk Register for the highlighted risks has been presented below. It contains the Risks, their number, the probability of occurrence of each risk (rated on a scale of 1-3), the impact associated with each risk (Rated on a scale of 1-3), the risk scores which are a product of the two preceding factors, the mitigation measures (listed below) and details of who would be required to perform the action and during what time frame.

Funding Risks:

For risks associated with funding, the mitigation measures are:

Adherence to Strategic goals

Role of Corporate governance

Seek new markets to enter or expand

Expansion via mergers

Improve credit rating to gain more loans.

Implementation Risks:

For risks associated with implementation risks, the mitigation measures are:

Process and system improvement training;

Effective communication of ...