The Role of Risk Management in Modern Organisations
The importance of risk management in reducing the amount of financial and Human losses under the impact of natural disasters
(Japan – Fukushima)
Abstract: This essay is mainly about the role of risk management in addressing any potential risk to the organisation that may cause a lot of losses. Management's mission is to predict the risk before disaster strikes, which require to study all the information and the details provided by the risk management team. In addition, what are the mistakes that had been committed in some of the examples mentioned in this essay? and did they learn from their mistakes?. Finally, development of communication must be promoted between risk management sector and top management and activating the role of participation in making the right decision.
Word Count: 1500 words
Risk management is basically a planning tool to manage risks, by evaluating and understanding the risks and the results of these risks and what are the expected risks that could occur in the near future, whether due to internal factors of the business or by external factors. The risk management is based on carrying out the coordinated planned steps through which to know the risks and the possibility of occurrence. Risk management is mainly focuses on the risks arising from financial or legal reasons (example: natural disasters, fires, accidents, death and lawsuits). The financial risk management focus on those risks that can be managed by using some analyzes and estimates, which may be a contributing factor to avoid any unexpected accident that may cause a lot of problems. This essay is focusing on the role of risk management when natural disasters occur and how organisations cope with these issues to reduce the amount of losses as possible as it can . The process of reducing the amount of losses when a natural disaster is nearly to occure is a very hard work to do. Many companies nowadays consider that risk management is one of the most important department that must be existed in any firm due to the job that they do, is to understand and evaluate the performance of a firm and work effectively to increase the succes by avoiding any potential losses through studing and analysing some factors that can be threaten to the organaisation. Nevertheless, some of the natural disasters sometimes can be and can not be predicted. Hurricanes for instance, can be predicted through the extremely change in weather where winds can be fast and stormy, but the exact area where hurricanes will take place can not be known. In contrast, earthquake can not be predected at all unless if we know the main fault lines and the tempreture of it where any increase in its tempreture for these lines we know that for sure it is going to be an earthquake but it still is very difficult to know where and when it will happen exactly.
A wide range of potential signals have been studied, ranging from increase in radon gas concentrations, changes in electromagnetic activity, foreshoks signalling a large quake to come, wraping or deformation of the earths surface, geochemical changes in groundwater – and even unusual animal in the moments leading up to a major quake. (McKenna 2011)
However, the job of risk management is to make sure that the top managements are aware and understand the possibilities that are linked to the natural disasters and try to reduce the losses by connecting the risk management department directly to the top management where decisions are discussed and made based on studies and analysis provided by the risk management team. Natural disasters is one of these risks which can lead to terrible disastrous consequences. However, these natural disasters can be predicted earlier that it is going to happen. The clue of predicting these disasters comes through the knowledge of some nature aspects, in terms of weather degree, the way that winds behave and some other external factors,...
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