Risk Management and Risk Assessment (Essay Sample)

Risk Management and Risk Assessment
Submitted by
Submission Date
Table of content
Abstract
Assignment # 1
1.1 Risk Management
1.2 Affects of risk management in organizations
1.3 Methods for assessing risks in business
2.1 Risk assessment
2.2 Risk Assessment approaches
Assignment # 2
3.1 Drivers of business risk
3.2 Types of risks
3.3 Analysis of the risk in Jimy disouza's software house
3.4 Strategies and crises management to tackle jimy disouza's risks
4.1 Crisis management for jimy disouza
4.2 Impact of the changes on jimy disouza's business continuity
Conclusion
References
Abstract
This report is a requirement for the credit unit. This report was conducted using different research articles to evaluate the risk management and risk assessment. This report caries research outcomes of different researchers and describes the different strategic methods that can be taken to identify risks and assign a risking strategy that can prevent downfalls. This report is divided into two sections, the initial section describes the risk management via different articles and second section carries a risk assessment of an organization. This report describes the risk assessment, crisis management, strategies and business continuity of an organization with the help of research that is available on the internet.
Assignment # 1
1 Risk Management
Risk management is an assessment to prioritize, control and monitor uncertainties that can occur and minimize the risk. Formally, risk management is defined structural and cultural process that is directed towards realizing the potential whilst of managing the effects CITATION Rog10 \l 1033 (Jones & Preston, 2010). Risks can come from different factors i.e. project failures, production, design issues and many other similar entities that become the cause of organization or project's downfall. Unfortunately, at times of crises the financial asset becomes very collateral CITATION Mar14 \l 1033 (Busse, Dacorogna, & Kratz, 2014), but risk management prioritizes these factors by strategizing a plan that can tackle uncertainties. The striking growth of credit derivatives suggests that market participants find them to be useful tools for risk management CITATION Mic07 \l 1033 (Gibson, 2007).
Risk management often follows the laws of probability, in most of the cases, organizations take those decisions having a less probability of risk and leaving those decisions with a higher percentage of seeing failures. Organizations constantly face risk issues because there are problems that come in the production line or organizations with higher goals take decisions that can give higher profit but at the same time, it makes organizations vulnerable. Even with the aforementioned typology of a risk assessment approach, different tools and methods can be employed to catch different processes that are important for understanding vulnerability CITATION Meg14 \l 1033 (Maloney & Preston, 2014). Risk management gives an edge on the possible industrial failures by strategizing a plan and looking at different factors that can cause failures in future.
Over the past years, a number of disciplines, including disaster risk analysis, public policy, international development, and macroeconomics have asked ‘‘whether disasters are problem of or for development CITATION Jun14 \l 1033 (Mochizuki, Mechler, Hochrainer-Stigler, Keating, & Williges, 2014). The organization is still learning to best this approach and make proper strategies to overcome risk issues and gain higher profit in the long run of business potential. Risk management works in two steps, the first thing that organizations look at is the different factors that can affect the decisions and the second step is designing a plan that can help tackle these factors to prevent failures. In business, these failures occur when small or large organizations choose to take higher risk decision over low risk decisions and by doing that they put themselves in a situation where the chance of failure become higher.
A paper on risk management stated that a large number of companies are moving towards a risk management approach CITATION Don10 \l 1033 (Pagach & Warr, 2010). The paper argued that the primary goal of risk management is to reduce the probability of financial distress and allow organizations to continue investment plans by reducing lower outcomes. The paper also suggested that smooth and steady earning allow organizations to increase leverage, pursue higher growth and gain more profit.
2 Affects of risk management in organizations
Risk management has been a topic of media for years. Many organizations have implemented risk management strategies, consultation, specialized units, and universities have developed special courses and center for risk management CITATION Rob08 \l 1033 (Hoyt, Moore, & Liebenberg, 2008).
Pooling and diversifying risk is a central function of the financial system CITATION Col14 \l 1033 (Cole, et al., 2014). Risk management effect different business and allows them to strategize a plan to tackle issues that come in near further. Risk management focus on following set of questions to identify what is best for the organization:
* Does current decision will affect the future aspects?
* Which decision will most suit the organization either decision A or decision B?
* Will organization gain from the current decision?
* How much will be the profit gain from the current decision?
These questions affect the organization overall performance, and before taking any action organizations strategize questionnaires to identify the profits in decisions. By following this approach, organizations make a strategic plan that leads them towards more profit with less risk factor.
A risk management research concentrating on development concluded the risks in the development sector by conducting different questionnaire to identify risk factors in development CITATION LIJ08 \l 1033 (LI, et al., 2008). Risk management is essential to implement before taking decisions, in past many organizations have failed because of not following risk management approach. There are many products from popular companies in the market became less popular because of the risk factor, and eventually that lead to losses in business. To prevent this disaster organization must follow the laws of probability and reduce the losses that come both in the assembly line and market. The effects of risk management go from a variety of problems and their solutions, if organization don't work to solve these issues, then that will not only lead to profit loss but also can completely bankrupt because of the decision without keeping risk management in consideration.
3 Methods for assessing risks in business
A research on risk management assessment divided the risk factor in two types, it describes that risk factors have two sides, one positive and other negative. The research called positive as a hope and negative as creation of losses or predication CITATION NED071 \l 1033 (NEDELJAKOVÁ, 2007).
The research explains the process of risk management as one man decision on the dangers. This decision is made automatically and is not in a numerical way, it is an assessment of the subjective method for possible dangers CITATION NED071 \l 1033 (NEDELJAKOVÁ, 2007). According to a research paper, the initial assessment of the risk management can be evaluated by following a set of questionnaires CITATION NED071 \l 1033 (NEDELJAKOVÁ, 2007):
* Identification of risk danger
* Qualification of risk danger
* Quantification of risk
*
The goal of qualification is to prevent losses, dangers, and prioritize risks on the basis of their value. In mathematical concept, the absolute and relative qualification is used. Absolute qualification expresses losses that may occur and relative qualification is about tackling the risk when it is already occurring CITATION NED071 \l 1033 (NEDELJAKOVÁ, 2007).
The qualification of the risk management is divided into two factors:
* Empirical factor
* Analytical factor
The empirical factor is when managers work in teams to identify the risk factor in a certain business, and Analytical factor is based on the intuition of the decision maker on the certain organizational decision CITATION NED071 \l 1033 (NEDELJAKOVÁ, 2007). The main objective of risk assessment is to identify the problems and tackle strategies for that particular problem; risk management is not only effective against decisions but also help take necessary action if companies face considerable losses. In these cases, risk management plan is strategic so that in case if the organization faces possible losses, then necessary action can be taken to overcome the issue. Assessment of risk management is divided into multi phases where one phase identifies probabilities of problems and other phase tackle problems by using different risk assessment strategies.
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4 Risk assessment
Risk assessment is the main element in the risk engineering and it is in identifying the risk. It is essential to know how risk works. The goal of risk management is to inform managers about possible outcomes of certain decisions. The proper method of risk management has not been codified yet risks can be tackled using different key factors. The risks can be divided into different categories depend on the concentration of the risk. Due to the fact that there are many risks that can occur for organization the proper defined methods are yet to be developed, some of the methods that were mentioned in a research paper for managing the risk are mentioned below CITATION NED071 \l 1033 (NEDELJAKOVÁ, 2007).
5 Risk Assessment approaches
Following are some of the approaches that can be utilized to prevent risk.
* Three di...