Risk management allows us to identify problems that are unknown during the start of the project, but that may occur later. Internal and external environments present a wide range of risks for an organization. Managers must establish strategies to manage hazards for the long-term survival of the company. This essay on risk management seeks to analyze how this can be achieved.
Before a risk management strategy can be decided, the risk event must first be identified. An organization must take three steps before deciding on the best risk management strategy to use. Because risk management can use a substantial amount of resources, clarifications and direction must be decided before risk management is carried out. The three factors are (Stanleigh, 201;.
For a company, assessing and managing risks is the best way to prepare for contingencies that may stand in the way of progress and growth. When a company evaluates its plan to manage potential threats and then develops structures to address them, it increases its chances of becoming a successful entity. Measuring risk in organizations involves evaluating the costs and benefits of risk reduction measures. Risk management is an ongoing process, through which the main risks are identified, listed and evaluated, the key people in charge of risk management are appointed, and risks are prioritized according to an evaluation scale in order to compare the effects and mutual importance of risks.
Deciding on the most optimal risk management strategy to use can be an incredibly difficult task for any manager to perform. However, before determining the best way to manage risks, the company must locate the cause of the risks by asking the following question: “What caused that risk and how could it influence the company? Several companies have improved their performance after establishing appropriate strategies to manage their employees, while others have failed due to the poor integration of the required aspects of global human resource management. This highlights the importance of risk assessment and why it is an imperative skill that a risk manager should learn to use skillfully. Change management is very important for an organization and managers must have the necessary skills to carry out this process.
This document will reflect on the different uses of project risk management and the ways in which having the ability to identify potential problems before they occur can benefit organizations. If the manager chooses an incorrect risk management strategy, the risk event could cause substantial problems in the organization's financial and market performance. Therefore, the EWRM is defined as an approach used to manage companies by controlling risks (Gupta, 2011). Location-based inventories are vital in risk management, as they ensure the protection of employees and the financial costs that result from damage to infrastructure.
Risk management is an important process because it provides the company with the necessary tools so that it can identify and adequately address potential risks. Risks occur in all situations in an organization and it is important to establish clear strategies to deal with risks as they arise in order to avoid losses (Hepworth, Rooney %26, Rooney, 200).