Risk Management

What is Risk ?

UNISDR (2012) mentions that risk is a probability where hazard could turn into a disaster, however vulnerability and hazards are not dangerous when taken separately, but if both those factors come together it can be a risk.

Source: KOWALENKO (2011)

What is Risk Management ?

Ensures that an organization will identify and understands the risks which it is exposed and taking effective actions in mitigating or stopping the loss or damage made to the company by that risk (IBC , 2013). IBC (2013) shows that proper risk management does not cost much time or money, it is uncomplicated as answering the following questions;

1. What can go wrong?
2. What will we do, both to prevent the harm from occurring and in response to the harm or loss?
3. If something happens, how will we pay for it?

 (IBC , 2013)

Source: (EPM Channel, 2013)

Examples for risk faced during a project:

• Massive downturn in economy
• Loss of lives of employees due to natural disaster 
• Rise cost of raw material 
• Client asking for more requirements at the end of the project 

Risk management processes

SCU (2013) mentions that risk management process is the systematic application of management policies, procedures and practices to the task of establishing the context, identifying, analyzing, assessing, treating, monitoring and communicating. 

• Identify the risk: Listing down the constrains which hold back achieving your desired objective, also you can list down the things that will cater towards enhancing in achieving the objectives.
• Identify the causes: Listing down the factors which might have caused these risks to hold back your progress.
• Identify the controls: Identifying the basic protocols that you have placed initially in order to mitigate these kinds of risks arises. 
• Establish you likelihood and descriptors: Remembering that these depend upon the context of your analysis ie. if your analysis relates to your work unit, any financial loss or loss of a key staff member.
• Establish your risk rating descriptors: What is meant by a Low, Moderate, High or Extreme Risk needs to be decided upon ahead of time.
• Make a decision: Once all the above steps are accomplished and if there are no any other risks, the decision of whether going ahead or not should be made.
• Monitoring and review: This is one of the most important steps in effective risk management, regular monitoring should be made.

(SCU, 2013)

Reference

EPM Channel, 2013. EPM Channel. [Online]
Available at: http://www.epmchannel.com/2012/02/08/why-enterprise-risk-management-is-a-good-business-sense-for-a-software-company/
[Accessed 17 01 2013].

IBC , 2013. IBC. [Online]
Available at: http://www.ibc.ca/en/Business_insurance/risk_management/
[Accessed 18 01 2013].

KOWALENKO, K., 2011. IEEE. [Online]
Available at: http://theinstitute.ieee.org/career-and-education/career-guidance/webinars-examine-risk-management
[Accessed 17 01 2013].

SCU, 2013. Sourthern Cross University. [Online]
Available at: http://www.scu.edu.au/risk_management/index.php/8/
[Accessed 17 01 2013].

UNISDR, 2012. UNISDR. [Online]
Available at: http://www.unisdr.org/2004/campaign/booklet-eng/Pagina9ing.pdf
[Accessed 17 01 2013].