When the fundamentals of the
business are about to change, there are risks that
need to be addressed and to be managed. That is why you need to manage the
risk.
Risk management is about securing “early mover”
positioning in the marketplace. Management of strategic uncertainties requires
an understanding of the key assumptions underlying the strategy and monitoring
changes in the business environment to ensure that these assumptions remain
valid over time.
Type of Risks.
There are various
type of risk that risk management plans can mitigate such as;
1.Competition – Competitive advantage including the strategy of a
competitor
2.Customer – Risk arising from the interaction with the buyers of
product and services
3.HSSE – The exposure to loss resulting from health, safety, security
and environmental aspects of the business operation
4.Finance – Risk associated with the finances of the Enterprise
5.Geo-political – Probability of loss due to political instability in
the operating country
6.Governance – Risk arising from implementation of a framework of rules
and practices
7.Human Capital – Risk of inadequacy in numbers or level of expertise
of personal employed
8.Legal/ Regulatory – The potential loss that may occur to a business
as a result of insufficient
9.Market – All risks associated with the price and quantity in the markets
10.Operational – Risk arising from execution of a company’s business
functions
11.Partnership – Risk arising from operating a business under a unique
orgazational entity
12.Reputation – Risk of impact to the business attributable
13.Socio-economic – Risks arising of relating to, or involving a
combination of social and economic factors
14.Strategy – Exposure to loss resulting from a strategy that turns out
to be defective or inappropriate
15.Supplier – Risk arising from the interaction with the parties
providing materials required in conducting business
Risk Analysis Process
1.Identify the Risk
Reviewing the lists of possible risk
sources as well as the project team's experiences and knowledge, all potential
risks are identified.
2.Assess the Risk
Traditional problem solving often moves
from problem identification to problem solution. However, before trying to
determine how best to manage risks, the project team must identify the root
causes of the identified risks.
3.Develop Responses to the Risk
Now the project team is ready to begin the
process of assessing possible remedies to manage the risk or possibly, prevent
the risk from occurring.
4.Develop a Contingency Plan or
Preventative Measures for the Risk
The project team will convert into tasks,
those ideas that were identified to reduce or eliminate risk likelihood.
Those tasks identified to manage the risk,
should it occur, are developed into short contingency plans that can be put
aside. Should the risk occur, they can be brought forward and quickly put into
action, thereby reducing the need to manage the risk by crisis.
Source:
http://www.bia.ca/articles/rm-risk-management
