Risk Management
Risk will always go hand in hand with the business or entrepreneur. In modern ages, risk of many types has evolved. Different organizations have different kinds of risks. A few types are financial, technical, social, internal or external. Form of organization can even contribute to the risk exposure.
With these ever emerging risks, there is always a chance of loss to the organizations. Hence to control the loss arising out of these assessed/ under assessed risks, there is need of risk management. With uncontrolled and unmanaged risks, entities can lose value for their shareholders and the important resources to further endanger reputational status of the entity.
Our services:
There is no fixed form or frequency of risks coming in the way of any organization; each one has its own. Given each organization workings are coordinated in optimum way; it can help a lot in reducing the risk exposure. We help you to improve your risk management infrastructure and capabilities by providing:
- Analysis of existing / proposed risks by carefully watching each minute manual involvement and Review of such risk management.
- Writing a risk management program
- Implementation of Risk Management Program
Why should we go for such review of Risk Management?
Below situations can be signs of low risk management profile and if following situations are before us, it can indicate that it is high time we should decide at least review of risk management :
- Uninsured risks
- Absence of a team of risk management or at least a full time manager
- Unawareness of significant and possible risks
- A considerable time lag between risk identification
- Unawareness of risk quantification and treatment thereof.
- Unawareness of applicable compliances.
- Change in routine affairs like change in Key persons or change in location of the entity
Step by Step Process of Risk Management
All risk management processes follow the same basic steps, although sometimes different description may be used to describe these steps. Together these 5 risk management process steps combine to deliver a simple and effective risk management process.
| Steps | Action | Principles |
|---|---|---|
| Step 1:Identify the Risk | Uncover, recognize and describe risks that might affect your project or its outcomes. There are a number of techniques one can use to find business risks. During this step you start to prepare your Risk Register. | Risk identification – What can go wrong? |
| Step 2: Analyze the risk. | Once risks are identified thereafter determine the likelihood and consequence of each risk. Develop an understanding of the nature of the risk and its potential to affect business goals and objectives. This information is also entered in the Risk Register. | Risk analysis – How will it affect us? (Consider probability and impact to operations – is it high or low?) |
| Step 3:Evaluate or Rank the Risk. | Evaluate or rank the risk by determining the risk magnitude, which is the combination of likelihood and consequence. Make decisions about whether the risk is acceptable or whether it is serious enough to warrant treatment. These risk rankings are also added to the Risk Register. | Risk control – What should we do? (to prevent the loss from occurring or to recover if the loss does occur) |
| Step 4: Treat the Risk. | This is also referred to as Risk Response Planning. During this step assess the highest ranked risks and set out a plan to treat or modify these risks to achieve acceptable risk levels. Minimize the probability of the negative risks as well as enhancing the opportunities by creating risk mitigation strategies, preventive plans and contingency plans. | Risk treatment – If something does happen, how will you pay for it? • Avoidance (eliminate, withdraw from or not become involved) • Reduction (optimize – mitigate) • Sharing (transfer – outsource or insure) • Retention (accept and budget) |
| Step 5: Monitor and Review the risk. | Review the Risk Register and use it to monitor, track and update risks. | Risk Monitoring – How can we continuously look at foresight and hindsight? |
If one designs a framework around that uncertainty, then you effectively de-risk the business. And that means one can move much more confidently to achieve your goals. By identifying and managing a comprehensive list of business risks, unpleasant surprises and barriers can be reduced and golden opportunities discovered. The risk management process also helps to resolve problems when they occur, because those problems have been envisaged, and plans to treat them have already been developed and agreed. One can avoid impulsive reactions and going into “fire- fighting” mode to rectify problems that could have been anticipated. This makes for happier, less stressed business teams and stakeholders. The end result is that we minimize the impacts of threats and capture the opportunities that occur.