Risk Management in Business

Powerful Essays
Risk Management Functions in Business

Submitted By:

Table of Contents

Introduction
In this competitive world the necessity of risk management is a very important task for any business to be successful in that particular industry. Businesses are supposed to prone with different types of risks. Some risks arise due to the uncertainty in the macroeconomic activity and others arise due to the firm specific activity (Rejda et al. 2013).
1 Role of Risk Management
1.1 Why risks need to be managed?
The necessity of managing risks beggar description. So, there should be detailed process in understanding the necessity of managing risks. In managing risks, first of all it is important to identify the all possible risks that might arise for a business. For example, a business should identify all kinds of risks which can affect its profitability and sustainability.
Another important aspect in managing risks is the probability of hampering business activity by any risks. Not necessarily all risks are going to affect businesses equally. So, businesses should first find out all risks and then weight their probability of hampering business activity.
Then comes the ways and means in which the business will mitigate its probable risks. The better the management of risks, the higher the profit potential and sustainability of a business (Blog method123.com 2010).
1.2Identifying Risks:
In order to identify risks business should know the types of risks. There are different types of risks: some are direct like natural disaster, legal, environmental, health and safety related, online security, intellectual properties, economic and financial risks etc, some indirect such as problems faced by suppliers, customers change in tastes, operational changes etc; some are related to hazards, some with uncertainty and some might even occur with the foregoing of any opportunities. Any business should carefully observe it s internal and external



References: Major, Claudia; Schondorf, Elisabeth 2011, ‘Comprehensive Approaches to Crisis Management’, SWP Comments. Rejda, George; McNamra, Michael 2013, Principles of Risk Management and Insurance, 12th Edition, Pearson. Haddow, George; Bullock, jane; Coppola, Damon 2010, Introduction to Emergency Management, Fourth Edition. Baranoff, Etti 2013,’the Necessity of Risk Management Culture and Incentive Pay’, Canadian Institute of Actuaries, Casualty Actuarial Society, Society of Actuaries. Enterprise Risk Management 2007 , Business Continuity Plan. Frigo, Mark; Anderson, Richard 2011, What Is Strategic Risk Management? STRATEGIC FINANCE. Blog method123.com 2010, ‘Importance of Risk Management’, retrieved 31 July 2013 from blog method123.com, < http://blog.method123.com/2010/09/08/importance-of-risk-management/#!prettyPhoto>. Enterprise Risk Management Committee 2003, Overview of Enterprise Risk Management (PDF). Casualty Actuarial Society. DeLoach, Jim 2012, ‘Key Elements of the Risk Management Process’, retrieved 31 July 2013 from corporate compliance insight.com,

You May Also Find These Documents Helpful

  • Powerful Essays

    Responses to recent corporate collapses have overlooked the importance of business ethics in managing risk * Four indicators of business ethics and their risk management aspects are discussed * Investors are wanting companies to disclose how they are managing the risks from poor business ethics practices Over the past decade, poor risk management of various kinds, for example, a lack of board independence or potentially compromised auditors, has contributed to sometimes spectacular company…

    • 2028 Words
    • 9 Pages
    Powerful Essays
  • Good Essays

    Business Risk

    • 1861 Words
    • 8 Pages

    this question needs the explanation of inter-relation between business risk and audit risk, which is automatically, must include the risk analysis as an approach to auditing to overcome with the concern of handling these risks. Before entering deeper to the business risk and how an auditor can manage and be aware of these risks, lets define and describe some of the terms which is related to this question as follows:- Business risk is generally defined as the threat posed by an event or action…

    • 1861 Words
    • 8 Pages
    Good Essays
  • Powerful Essays

    Risk Management in Export-Import Business Now since the world is all connected and globalization became normal in this century, many investors and traders turn into international trading. International trading opens a very likely chance of benefiting market to do successful business. International trading includes exporting and importing which allows the businessman to connect personally with all the necessary suppliers and manufacturers which will eventually lead to cost effectiveness. However…

    • 1472 Words
    • 6 Pages
    Powerful Essays
  • Good Essays

    Risk Management

    • 828 Words
    • 4 Pages

    Procedure: Development of a Risk Management Profile The following outlines the process for developing a risk management profile. 1. Establish the context ● Define and identify the environment, characteristics and stakeholders, their goals and objectives, and the scope of the specific risk management process. ● Develop criteria against which risks are evaluated and identify the structure for risk management. 2. Identify and describe risks ● Risks are best identified through a collaborative…

    • 828 Words
    • 4 Pages
    Good Essays
  • Good Essays

    Risk Management

    • 12382 Words
    • 50 Pages

    “Risk Management in Banks: The AHP way” By: Diksha Arora PG Candidate, Class of PGDM-2010 BIMTECH, India Abstract Risk is inherent in every walk of life. Banks are, by definition, in the business of taking and managing risk. The paper deals with the study of Risks associated with commercial banks like risk revolving on capital, credit risk, market risk, liquidity risk, earnings risk, business strategy risk, environmental risk, operational risk, group risk, internal control risk, organizational…

    • 12382 Words
    • 50 Pages
    Good Essays
  • Better Essays

    RISK MANAGEMENT

    • 1808 Words
    • 8 Pages

    Security and Risk Management Essay Introduction Risk can be closely linked with the existence of humans on planet earth, as they continue to identify a number of sudden or in some instances unexpected events. These events can be classified as either natural or possibly even man made. The difficulty of avoiding the uncertainty of the consequence related to the risk, in the long term makes people risk adverse. Taking into consideration risk avoidance, risk transfer, risk retention and where…

    • 1808 Words
    • 8 Pages
    Better Essays
  • Powerful Essays

    Risk Management

    • 10243 Words
    • 41 Pages

    papers are available from the author. Integrated Risk Management for the Firm: A Senior Manager's Guide Lisa K. Meulbroek Harvard Business School Soldiers Field Road Boston,MA 02163 The author gratefully acknowledges the financial support of Harvard Business School's Division of Research. Email: Lmeulbroek@hbs.edu Abstract This paper is intended as a risk management primer for senior managers. It discusses the integrated risk management framework, emphasizing the connections between the…

    • 10243 Words
    • 41 Pages
    Powerful Essays
  • Powerful Essays

    Risk Management

    • 3992 Words
    • 16 Pages

    Risk is defined in ISO 31000 as the effect of uncertainty on objectives (whether positive or negative). Risk management can therefore be considered the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events[1] or to maximize the realization of opportunities. Risks can come from uncertainty in financial markets, project failures, legal liabilities,…

    • 3992 Words
    • 16 Pages
    Powerful Essays
  • Powerful Essays

    Risk Management

    • 2149 Words
    • 9 Pages

    Risk Management Risk management is the process of evaluation and quantification of business risks in order to take the necessary measures to control or reduce them. Risk management in organizations includes the methods and processes used to manage risks and seize opportunities related to the achievement of their objectives. By identifying and proactively addressing risks and opportunities, business enterprises protect and create value for their stakeholders, including owners, employees, customers…

    • 2149 Words
    • 9 Pages
    Powerful Essays
  • Powerful Essays

    Risk Management

    • 2347 Words
    • 10 Pages

    Risk Management and Control ------------------------------------------------- Case Hydro One Table of Content 1. Introduction 3 2. Hydro One’s Strategy and risks 3 3. Major drivers to get started with ERM at Hydro One 4 4. Different stages of Hydro One’s ERM process 4 5. Up- and downsides of the ERM process 5 6. Framework 5 6.1 Establishing the context 5 6.2 Risk assessment 5 6.3 Risk treatment options 6 6.4 Communication and consultation 6 6.5 Monitoring and reviewing…

    • 2347 Words
    • 10 Pages
    Powerful Essays