Abstract Risk Management is a standout amongst the most essential process of project management. History had demonstrated that risk management is the basic concern to the Project Manager. The fundamental aim of the risk management is to diminish the probability of project failure. Each and every project irrespective how big or small, technical or non-technical, corporate or social etc. If these risks are unmanaged and uncontrolled, may lead to project failure. Portfolio management and risk management aim for the same goal to diversify risk. In portfolio management, an investor will utilize capital they have earned over a period of time and invest their capital to earn a return on their investment.
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Risks And Risks Of Risk Management
Essays Essays FlashCards. Browse Essays. Home Page Risk Management Essay. Risk Management Essay Words 10 Pages. Show More. Conrow, Project cost, performance, and schedule, these are the factors a project manager has to put into consideration when starting a project, risk management is needed in a project before it is commenced so that the project manager has to have a backup plan and avoid the project from becoming a failure.
PROJECT FAILURE simply means being unable to meet with the project requirement or the satisfaction of the client organisation which is caused by missing the deadline, exceeded budget, lack of communication between the project manager and the stakeholders, ignoring risk, lack of motivation, poor progress, insufficient. Read More. Words: - Pages:. Essay Risks And Risks Of Risk Management overburdened by many complications and uncertainty, resulting in more risk and can be found in all the fields of human activities.
Words: - Pages: 4. Words: - Pages: 5. Essay Risks And Risks Of Risk Management Risk management is a systematic, analytical process to consider the likelihood that a threat will harm an asset or individuals and to identify actions to reduce the risk and mitigate the consequences on an attack as defined by Homeland Security: Key Elements of a Risk Management Approach. Essay Risk Analysis And Risk Management must take risk analysis and risk management into consideration. Words: - Pages: 7. The focus of good risk management is the identification and treatment of these risks.
Risk Management Essay
Its objective is to add maximum sustainable value to all the activities of the organisation. It assembles the understanding of the potential upside and downside of all those factors which can affect the organisation. It must be integrated into the culture of the organisation with an effective policy and a programme led by the most senior management.
It must translate the strategy into tactical and operational objectives, assigning responsibility throughout the organisation with each manager and employee responsible for the management of risk as part of their job description. It supports accountability, performance measurement and reward, thus promoting operational efficiency at all levels. The risks facing an organisation and its operations can result from factors both external and internal to the organisation.
They can be categorized further into types of risk such as strategic, financial, operational, hazard, etc. To set an enterprise-wide acceptable risk level for a company, a few things need to be investigated and understood.
A company must understand its national and state legal requirements, its regulatory requirements, its business drivers and objectives, and it must carry out a risk and threat analysis. Although there are different methodologies for enterprise risk management, the core components of any risk analysis is made up of the following:.
Senior management can then choose one of the following activities pertaining to each of the identified risks: Mitigate the risk by implementing the recommended countermeasure, Accept the risk, Avoid the risk, Transfer the risk by purchasing insurance. According to Frederick Funston, Stephen Wagner and Henry Ristuccia many times senior management will follow the advice of the risk analysis team and allocate the necessary funds to implement the suggested countermeasures.
Countermeasures can come in many different forms: firewalls, IDS, training, written policies and procedures, and so on. What is important to understand is that no countermeasure can completely eliminate risk — there is always some risk. This is called residual risk.
The internal audit function is an integral part of the corporate governance regime of most public companies and a number of larger private companies. The separateness of the external and internal audit functions are essential to proper corporate governance, as the one acts as a system of checks and balances in respect of the other. In practice there is often a high degree of cooperation between the external and internal audit functions of a company, and the external auditors usually affirm in their audit report the extent to which reliance has been placed on the work performed by internal audit.
The purpose, authority and responsibility of the internal audit function should be formally defined in a form consistent with the standards of the Institute of Internal Auditors, and a formal Internal Audit Charter should be approved by the board.
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The charter should define the mission and scope of the internal audit function, its sphere of responsibility, its authority within the company, and its accountability and reporting obligations. The internal audit function should be sufficiently independent of the activities audited to ensure that the fact that internal auditors may be employees of the company does not hamper their independence and their ability to be objective. Internal audit should report at a level within the company that allows it to accomplish its responsibilities without undue interference, preferably to the CEO or the chairman.
The appointment or dismissal of the head of internal audit should be dealt with in consultation with the audit committee. Risks are an unavoidable part of the business process, but good risk management at least protects an organisation against avoidable losses. Risk management is the process of deciding which risks to avoid, control, transfer or tolerate. The overall responsibility for risk management, which includes internal controls, rests with the board of directors.
The board is responsible for ensuring that a formal risk assessment is undertaken at least annually for the purposes of making its public statement on risk management, including internal control. The board should acknowledge, in this statement, its responsibility for the risk management process and for reviewing its effectiveness. Management is accountable to the board for designing, implementing and monitoring the process of risk management, and integrating it into the day-to-day activities of the company.
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Management is also accountable to the board for providing assurances that it has done so. Risk management is multi-faceted and requires a team-based approach. Boards are encouraged to appoint dedicated committees to oversee the risk management process. Members of a risk committee should be executive directors and senior management who are involved with the operational functions of the organisation in addition to non executive directors with relevant skills or experience.
According to k. Stimpson risk management aims to create a disciplined, structured and controlled environment within which risks to the organisation can be anticipated and maintained within predetermined, acceptable limits.
Circumstances demanding close attention include substantive changes to the operating environment, new personnel, new or revamped information systems, rapid growth, new technology, products or activities, corporate restructuring, acquisitions and disposals, and foreign operations. Control activities such as approvals, authorizations, verifications, operating reviews and reporting, and division of duties should be implemented in order to try and avoid risks materializing.
Relevant information should be communicated in an appropriate and timely way in order to enable employees to properly carry out their responsibilities. The communication system should ensure that all information, positive and negative, reaches senior management without delay. The monitoring process assesses the quality of control systems over time. This may be accomplished through ongoing monitoring activities, separate evaluations or by a combination of the two.
Since profits are in essence the reward for successful risk-taking by a company, the purpose of an internal control system is to help manage and control risk appropriately rather than to eliminate it. Control mechanisms should be incorporated into the business plan and embedded in the day-to-day activities. The system of internal control should be capable of responding quickly to the needs of the business arising from factors within the company and changes in the internal and external business environment. It should include procedures for reporting to appropriate levels of management any significant control failings or weaknesses that are identified.
According to G. Johnson, K.
3. External and Internal Factors
Scholes, and R. Whittington exploring corporate strategy since risk management includes a system of internal control, the internal auditing function should assist the board and management in identifying, evaluating and assessing significant organisational risks, and provide assurance as to the effectiveness of related internal controls. There is nobody on this planet who has not taken a single risk in his or her life, each and every person journeys through life taking some risk or the other.
All that varies from person to person is the degree and amount of risk that is taken.
Risk management is something that is applicable to one and all, regardless of whether you happen to be a businessman, an entrepreneur, a freelancer, a self-employed individual or a 9 to 5 working employee. The concept behind a risk management process is extremely simple. It is the process of anticipating and analyzing risks and coming up with effective and efficient ways of managing as well as eradicating them.
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