About Risk Management Process
Risk management is a function that incorporates identification of risk, evaluation of risk, formulation of schemes to handle risks and reduction or elimination of risk utilizing a number of methods.Risk management process is an important task for the managers of an organization. It is an orderly implementation of management policies, processes and methods towards the function of establishment of context, identification of risk, analysis and assessment of risk and handling of risk.
The process of risk management comprises a number of steps and they are carried out in a sequential manner.
Process of Risk Management
The procedure of risk management can be elaborated as follows:- Establishment of context
This step includes the following sub steps:- Identification of risk in a particular area of interest
- Planning the remaining part of the procedure
- Representing the following: the societal ambit of risk management, the targets and identity of shareholders, and the base of assessment of the risks and restraints
- Delineating a model for the function and a schedule for recognition
- Formulating an assessment of the risks included in the procedure
- Mitigating risk utilizing the accessible human, organizational and technological resources
- Identification of risk
Usually, the risk identification methods include the following:- Risk identification on the basis of scenarios
- Risk identification on the basis of objectives
- Common-risk checking
- Risk identification on the basis of taxonomy
- Risk charting
Besides these, two methods are also utilized for the purpose of identification of risk and they are the following:- Source analysis
- Problem analysis
- Analysis or evaluation of risks
- Treatment of risk or handling of risk
- Risk reduction (also known as risk mitigation)
- Risk avoidance (also known as risk elimination)
- Risk transfer (also known as purchasing insurance)
- Risk retention
