Risk Management Plan

Risk Management Plan

Introduction

Risk management is a process that an organization uses to reduce exposure to liability. By developing and implementing policies and procedures can minimize the risk face by personnel in any organization. Even though, risk management can not entirely eliminate the risk of financial liability; however procedure can help to reduce the risk to an acceptable level.

Risk management is a responsibility of an individual or a corporate. Risk management approach will ensure that all representatives must be involved and understand the environment and allow them to foresee and manage issues that can have an impact on organizational goals.

Discussion

Risk

The term 'risk' is universally used, the meaning of risk used differently by different audiences (Kloman, 1990). It depends on the context where it is applied to support decision making (Charette, 1990). For example, safety professional will use risk management in a context to reduce accidents and injuries. Hospital personnel use risk in a context of quality assurance program of an organization.

However, characteristics of risk remain same for all definitions. Existence of risk follows three states to be presented in any condition, which must be gratified (Charette, 1990):

There must be a potential existence for a loss.

Presence of uncertainty to a decision making.

Some decision making must be dealt with uncertainty and potential loss.

Above stated characteristics define the basic definition of risk, where uncertainty and loss are the most focused conditions. Therefore, the nature of risk, no matter what the area is, can be defined as the risk is a possibility of suffering loss (Dorofee et al., 1996)

Purpose and scope

The purpose of the risk management plan is to set up an approach to monitor, evaluate and manage the risk throughout the project. A risk is an uncertain event which can have negative or positive effect on the objective of the project.

The risk management process will identify possible risk sources or problems; evaluating them individually and possible impacts on performance; evaluating different options to mitigate high level of risks, and developing action plans to control risks individually.

All the identified risks will be recorded in the Risk Register. The Risk Register will record risks according to their classification, risk levels, mitigation and their strategies, cost impact and action plans.

Risk Management

Risk management is a systematic plan to reduce the exposure of risk, the effect of uncertainty on objectives. Risk management is the process for identifying the risk, analyzing the risk, evaluating the risk, and treating the risk. Risk management can be incorporated with managing issues and opportunities (Alberts & Dorofee, 2009). Risk with the greater impact of possibility is handled first and risk with lower probability is handled in descending order. Risk management must minimize spending and reduce all negative effects of risk. Risk management helps company to achieve both its capital structure and ownership structure by reducing risk and expected costs of financial difficulty (Stulz, 2005)

Risk Management Plan

Risk Management Plan is the complete process which establishes the approach and carries out risk activities for the ...