RISK ASSESSMENT

Risk Assessment

Risk Assessment

Introduction

Risk can be defined as anything against the expectation level that would harm the original expectation and further proceedings. Or in simple words consequence of any activity that would affect the human values. . Risk is the probability of variation in the happening of an event that may have either optimistic, or unconstructive, consequences (Harrison, 2009, pp. 225). But traditionally risk has negative image that shows any loss, hazard, adverse and harm result, however some existing risk course of action and principles comprise of the possibility of upside risk or opportunity. In spite of recent thought for positive risks, most risk examination and management process still spotlight on organizing risk and threats, and the area of prospect requires more effort.

Discussion

Risk assessment means getting to know and recording how serious are the hazards in the activity or environment or in simple words it is the process of identifying risk factors by using quantified and qualified methods in order to manage them. Risk involved in projects is the straight outcome of ambiguity from dissimilar characteristics, either as of the nature of the project or judgmental uncertainty. Therefore, it is important to state the approach adopted in the characterization of risk, and, assumed of the associated uncertainty, when the risk factors, communicated to the concerned parties or the decision makers (Carter, 2002, pp. 126).

The chances of few tasks to occur or their probable penalty might be defined quite well while others are not possible or are considered complicated to describe. Still many way are being discussed for the calculation and measurement of risk these days and these ways can differ in their names and way of doing but their aim is same that is to find out the risk involved.

Types of Risk

Some of the major types of risks are thoroughly described below.

Systematic Risk

This type of risk can affect major portion of the company's assets. Its example can of any major political changes that influence the economy. In most of the cases these type of risks are almost impossible to control and avoid their impact on ourselves.

Unsystematic Risk

It is also known as the specific risk. Only a very few number of assets are affected from this type of risk. Its example can be sudden strike from some of the employees. Companies can protect themselves from this risk with the help of diversification.

Credit and Default Risk

Credit risk is the type of risk that arises when a person becomes unable to payout his interest or principal payments on its debt obligations. This type of risk is concerned by the investors who have invested in their portfolio through bonds. Government bonds have the least credit or default risk so they pay lowest returns. And similarly corporate bond hold higher risk that is why they are paid with higher returns to the investors.

Country risk

It is the type of risk that refers to the chances of risk that a country will not be able to honor its financial ...