Risk management is the identification, assessment, and prioritization of risks followed by measures to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities.
Risk Management – The Process Of Identification
Risk management the process of identifying and analyzing various risks that can affect the project of the organization with the goal to address all these risks. This is the first goal to achieve for any good management program. The basic purpose of the risk management is the treatment of all these risks after identification.
This is a very important part of a business plan because it plays a vital role in achieving the goals related to that plan. It is the methodology that gives managers the opportunity to make the best use of the available resources and to achieve their goals. Its objective is to minimize the possibility of failure and to maximize the probability of success. It is a continuous assignment which needs to be monitored throughout the project.
There are basic steps of this management style. First is identifying the risks that can affect the goals of the organization one by one. Then comes analyzing the probability and frequency of the risks and their cost impact. After that evaluations must be made that give ranks to the risks involved in the project according to the priorities of the organization. Finally treatments must be made that make a proper and effective plan to solve all the identified risks and implement it.
Even after all these basic steps, the job is still not finished because it is a continuous process and needs to be frequently monitored and reviewed. Managers have to monitor the activities and review their policies regularly, communicate and consult regularly with each other if their policies and decisions are working effectively and adjust if needed. Risk management is necessary to deal with all the risks involved in the project and hence promotes the operational efficiency at all levels.