Extended definition of risk management Essay Example | Topics and Well Written Essays - 750 words

Extended definition of risk management - Essay Example For instance, engineers can also benefit from risk management in minimizing costs, medical practitioners can be prepared in combating anticipated epidemics and agriculturist can remedy impending food deficiency through risk management. This wide essentiality of risk management brings interest of knowing about it not only to the business world but to almost every individual. According to Michel Ravassard, risk management â€Å"is a systematic approach to managing risks throughout the whole organization by identifying, assessing, understanding, acting on and communicating risk issues† (2010). By saying it is a systematic approach; the author suggests that the process has a set of procedures which needs to be observed. Moreover, it is scientifically founded on research and intense study of the procedures, making the process more reliable in terms of accuracy. Therefore, risk management is not just based on a theory nor is it an instantaneous changing of the mind of the manager but it is a well-established principle that has been tested and tried for years in several organizations. Another aspect of risk management that needs to be defined in order for someone to understand further its meaning is risk. The aforementioned author says that risk is â€Å"the expression and the likelihood and impact of an uncertain, sudden and extreme event that, if it occurs, has many impact positively (opportunity) or negatively (threat) on the achievement of a project or programme objective†. ... For instance, when a company decides to use the internet to expand on its business; there might be problems on delivery, payment, demand, availability of products or materials that would occur. Therefore, these important issues should be determined so that the businessman will be able to prepare solutions to anticipated problems in order for the dilemma to be minimized if not avoided. The act of trying to minimize or avoid problems is actually what is called risk management. The first step in the process is for a manager to identify the risks of a certain project so that appropriate solutions will be later prepared. Once the risk is known, they have to be evaluated, considering all the angles of the issue that they may bring about that will affect the project’s objectives. Consequences may be multi-faceted so that managers should not concentrate only in the obvious or visible effects of the risks but should look deeper into what other results there may be. in doing so, one exh ibits a clear understanding of the project and thereby knows what to expect. Furthermore, risk management serves as a motivation to act on a project optimistically because of being assured that there would be minimal mistakes that will take place. Another important measure in risk management is communicating the likelihood of sudden impact to the people involved in order for them to be able to understand the process. This will greatly affect the project because it determines how people should deal with the expected problems or project and how it will be maintained. In the definition of risk, it should be noted that it does not only consider the negative impact but it also mentions the positive effects. This is so because even