Describe the risk management process in detail
Answers
Risk Management is "the systematic application of management policies, procedures and practices to the tasks of establishing the context, identifying, analysing, assessing, treating, monitoring and communicating"
Risk management should be applied to all levels of the University, in both the strategic and operational contexts, to specific projects, decisions and recognised risk areas. Risk is 'the chance of something happening that will have an impact on objectives'.
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Answer:
Risk Management Process Definition
In business, risk management is defined as the process of identifying, monitoring and managing potential risks in order to minimize the negative impact they may have on an organization. Examples of potential risks include security breaches, data loss, cyber attacks, system failures and natural disasters. An effective risk management process will help identify which risks pose the biggest threat to an organization and provide guidelines for handling them.✔️
The 3 Steps of Risk Management
The risk management process consists of three parts: risk assessment and analysis, risk evaluation and risk treatment. Below, we delve further into the three components of risk management and explain what you can do to simplify the process. ✔️
Risk Assessment & Analysis
The first step of the risk management process is called the risk assessment and analysis stage. A risk assessment evaluates an organization's exposure to uncertain events that could impact its day-to-day operations and estimates the damage those events could have on an organization's revenue and reputation.✔️
According to The Institute of Risk Management, "This requires an intimate knowledge of the organization, the market in which it operates, the legal, social, political and cultural environment in which it exists, as well as the development of a sound understanding of its strategic and operational objectives."✔️
Effectively assessing and analyzing an organization's risks helps protect assets, improve decision making and optimize operational efficiency across the board to save money, time and resources.✔️
Risk Evaluation
After the risk assessment/analysis has been completed, a risk evaluation should take place. A risk evaluation compares estimated risks against risk criteria that the organization has already established. Risk criteria can include associated costs and benefits, socio-economic factors, legal requirements and system malfunctions.✔️
Risk Treatment & Response
The last step in the risk management process is risk treatment and response. Risk treatment is the implementation of policies and procedures that will help avoid or minimize risks. Risk treatment also extends to risk transfer and risk financing.
It is important to note that risk management is an ongoing process and does not end once risks have been identified and mitigated. An organization's risk management policies should be revisited every year to ensure policies are up-to-date and relevant.✔️