RISK MANAGEMENT

Risk Management

Risk Management

Introduction

A deficient and imperfect knowledge where probability of likely outcomes is known and uncertainty is present when these probabilities are not recognized is known as risk whereas risk management is defined as selecting amongst alternatives for reducing effects of risks. It needs an evaluation for exchange between risk change, expected returns and freedom of entrepreneurs amongst others (Hartley, 2009).

Discussion

Process of Risk Management

By help of using the strategy of organizations as a context instead of using it as regulatory requirements or best practice, the initial step in the process of risk management is identifying the risk which should be embraced for achieving this strategy. The operational disciplines are known to be those units of organizations that are not able gather or make more money for example, IT, HR, finance, marketing etc. After identifying activities of risks, then they are assessed by using different rating systems such as green, red or amber in order to determine whether they are achieved or not. It should be noted that there are two main steps in the initial stage of risk management process that mostly lacks in different programs of project management. First step is that operational managers must be asked to give his prediction regard regarding rating of risk for four quarters. It helps the organizations to attain more data that is valuable during risk management. Moreover, it provides project managers an ability to cope-up with expected challenges in future or it explains how present challenges will be addressed positively (Bartlett, 2004, pp. 45-51).

The second important step that organizations lack during risk management process is asking the operational managers to point out that most important activities according to them have sufficient funding or not. Moreover, this information should be collected and organizations should have map of that whether making investing in managing risk is feasible for them or not (Bartlett, 2004, pp. 45-51). After end of every quarter, operational managers are then asked to complete planned vs. actual assessment and this exercise do not only assess competency but it is also able to access another communication channel in the process of risk management. The strategy of the organization can be changed needing a new risk perception and operational awareness of less or more challenges can impact original rating of risk. During this process, departure of original risk assessment is expected and should be recognized as business intelligence instead of perceptive scoring abilities (Cooper et.al, 2005, pp. 171-176).

The risk management can be implemented in the second step once process has been established and business managers are then asked in this process for contributing their risk perception to operational activities that are mission-critical and identified. An example is the department of IT that specify compression in an newly implemented operating system and give rating of red or amber given exposure in security and maintenance, but it can be rated as green by the business manager because of lack in technical knowledge. Perception of risk difference is expected and provides an opportunity ...