What is Risk Management?

Risk Management: What is Risk? A sudden and unexpected event leading to major unrest amongst the individuals at the workplace is called organization Risk. In other words, Risk is defined as an emergency situation which disturbs the employees as well as leads to instability in the organization. Risk affects an individual, group, organization or society on the whole.

Know and Understand the Risk Management.

Definition of Risk management: The identification, analysis, assessment, control, and avoidance, minimization, or elimination of unacceptable risks. An organization may use risk assumption, risk avoidance, risk retention, risk transfer, or any other strategy (or a combination of strategies) in proper management of future events.

Characteristics of Risk:

• The risk is a sequence of sudden disturbing events harming the organization.
• Risk generally arises on short notice.
• Risk triggers a feeling of fear and threat amongst individuals.

Risk can arise in an organization due to any of the following reasons:

• Technological failure and Breakdown of machines lead to Risk. Problems in the internet, corruption in the software, errors in passwords all result in Risk.
• Risk arises when employees do not agree with each other and fight amongst themselves. Risk arises as a result of the boycott, strikes for indefinite periods, disputes and so on.
• Violence, thefts, and terrorism at the workplace result in organization Risk.
• Neglecting minor issues, in the beginning, can lead to major Risk and a situation of uncertainty at the workplace. The management must have complete control of its employees and should not adopt a casual attitude at work.
• Illegal behaviors such as accepting bribes, frauds, data or information tampering all lead to organization Risk.
• Risk arises when the organization fails to pay its creditors and declares itself a bankrupt organization.

The art of dealing with sudden and unexpected events which disturb the employees, an organization as well as external clients refer to Risk Management.

The process of handling unexpected and sudden changes in organizational culture is called Risk management.

Need for Risk Management:

• Risk Management prepares individuals to face unexpected developments and adverse conditions in the organization with courage and determination.
• Employees adjust well to the sudden changes in the organization.
• Employees can understand and analyze the causes of Risk and cope with it in the best possible way.
• Risk Management helps the managers to devise strategies to come out of uncertain conditions and also decide on the future course of action.
• Risk Management helps the managers to feel the early signs of Risk, warn the employees against the aftermaths and take necessary precautions for the same.

Essential Featured of Risk Management:

• Risk Management includes activities and processes which help the managers as well as employees to analyze and understand events which might lead to Risk and uncertainty in the organization.
• Risk Management enables managers and employees to respond effectively to changes in the organizational culture.
• It consists of effective coordination amongst the departments to overcome emergency situations.
• Employees at the time of Risk must communicate effectively with each other and try their level best to overcome tough times. Points to keep in mind during Risk
• Don’t panic or spread rumors around. Be patient.
• At the time of Risk, the management should be in regular touch with the employees, external clients, stakeholders as well as media.
• Avoid being too rigid. One should adapt well to changes and new situations.

Risk management is the identification, assessment, and prioritization of risks (defined in ISO 31000 as the effect of uncertainty on objectives) followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities. Risk management’s objective is to assure uncertainty does not deflect the endeavor from the business goals.

Risks can come from various sources including uncertainty in financial markets, threats from project failures (at any phase in design, development, production, or sustainment life-cycles), legal liabilities, credit risk, accidents, natural causes and disasters, deliberate attack from an adversary, or events of uncertain or unpredictable root-cause. There are two types of events i.e. negative events can be classified as risks while positive events are classified as opportunities.

Several risk management standards have been developed including the Project Management Institute, the National Institute of Standards and Technology, actuarial societies, and ISO standards. Methods, definitions, and goals vary widely according to whether the risk management method is in the context of project management, security, engineering, industrial processes, financial portfolios, actuarial assessments, or public health and safety.