risk management essay conclusion

Risk Management - Free Essay Examples And Topic Ideas

Risk management involves identifying, assessing, and controlling threats to an organization’s capital and earnings. These threats could stem from a wide variety of sources, including financial uncertainty, legal liabilities, strategic management errors, accidents, and natural disasters. An essay on risk management might cover strategies to mitigate risks, the impact of risk management on business performance, and the evolution of risk management practices over time. This topic might also touch on various risk assessment models, the ethical aspects of risk management, and case studies illustrating the consequences of inadequate risk management. We have collected a large number of free essay examples about Risk Management you can find in Papersowl database. You can use our samples for inspiration to write your own essay, research paper, or just to explore a new topic for yourself.

Risk Management in Nursing Practice

Bowers (2014) identifies the need for the preservation of safety as the most crucial objective for mental health nursing. However, this is a very isolative environment with seclusion being a part of this treatment and intervention. Clifton et al (2017) argues that this could lead to possible deterioration of social inclusion, independence and communication. Shared decision-making (SDM) is a frequently utilized model for the purpose of approaching sensitive decisions (Stiggelbout et al, 2015). This process is where clinicians and patients […]

Risk Management of Innovation Projects

Abstract A company’s ability to create new products and services that differentiate them from the competition is becoming a key factor to ensure a business’ longevity in this ever-growing market. Because of this, organizations have continuously tried to launch innovation projects that ultimately fail in most cases due to the higher than normal levels of risk and uncertainty associated with these types of ventures. The purpose of this paper is to review and analyze the characteristics of radical innovation projects […]

Discuss the Importance of Data Management in Research

1. Definiton of Key terms Data management is a general term which refers to a part of research process involving organising, structuring, storage and care of data generated during the research process. It is of prime importance in that it is part of good research practice and it has a bearing on the quality of analysis and research output. The University of Edinburgh (2014) defines data management as a general term covering how you organize, structure, store and care for […]

We will write an essay sample crafted to your needs.

What is Risk Management?

A risk is any unverifiable event or condition that may influence our task(project). Not all dangers are negative. A few occasions or conditions can encourage our task. At the point when this occurs, we consider it a chance; however it's as yet dealt with simply like a hazard. A proactive task group attempts to determine potential issues previously they happen. This is the craft of hazard administration. The motivation behind hazard administration is to recognize the hazard factors for a […]

Effective Risk Management

Uncertainty bounds today's economy, and every organization needs a structured process for effective risk management to sustain a competitive edge (K. J., A., V. R., and U., 2017). Numerous corporate governance regulations, like the SOX Act 2002, COSO Enterprise Risk Management Framework 2004, Companies Act 2013, and Clause 49 of SEBI, have made the existence of a risk management committee mandatory. A risk management committee, a person, or a group of persons, is required at the top management level for […]

Citizen and Government Collaboration in Addressing Natural Disasters in Japan

Natural hazards are indeed inevitable, even during this time of pandemic. A massive 7.3 magnitude earthquake has jolted the northeastern coast of Japan, leaving 150 injured people last February 13, 2021. It’s considered an aftershock of the 2011 Great East Japan Earthquake because it happened just weeks before its 10th anniversary. The 7.3 magnitude earthquake caused widespread blackouts, affecting 950,000 households, and displaced around 240 people in Miyagi and Fukushima prefectures from their homes. The Japanese Intensity Scale logged it […]

Futuram’s Risk Management Strategy

Read the following story about this agricultural biotech firm carefully, then answer the questions at the end of the case. This story, all names, characters, and incidents described are fictitious. No identification with actual persons, companies, places, or products is intended or should be inferred. Normally, when Futuram is mentioned in newspapers, it's usually for a new genetically engineered seed. Yet this agricultural biotech firm, based in California, has turned to financial engineering to ensure its profits. At its January 2017 […]

IT Risk Management Techniques

Introduction In life, only two things are true about failure. One, it is common and second, nobody likes them. Failure is something that cannot be completely avoided but it is not absolute as well. Past failures become better lessons on which such failures doesn’t occur in the future. Modifications and changes made due to failures signal positive changes in the entity and scopes for improvement. The only irony in this case is that each failure comes at a certain cost. […]

Risk Policy, Management and Communication

I would like to thank the Municipal Administration and Water Supplies Department, State Government of Tamil Nadu, India for inviting me to speak about the current scenario and to give my recommendations for making P.N.Palayam a model town with regard to Sanitation. I am Priscilla, an Environmental Scientist, representing Bill and Melinda Gates Foundation, India. I have done my master’s in environmental science in 1996 and completed my Doctoral degree in Environmental Health at Johns Hopkins Bloomberg School of Public […]

Disaster Risk Management

"Disasters can happen to anyone at any time, but research says even the best disaster-recovery plans will not work exactly as envisioned (Drew & Tysiac, 2013). Huge amounts of destruction and suffering can lead to mental health and other issues for employees. This is why organizations should focus on their people's needs. Firms in the state of Florida and other natural disaster areas are well-advised to have business interruption insurance, which is structured to compensate businesses for time-frames when they […]

Effective Teamwork: Risk Management

Risk is the presence of uncertainty of results regarding present actions ( Shastri and Shastri, 2014 ). Risk arises due to occurrence of chance events, incubating and culminating in the changing dynamics of the environment. All functional areas of an organization are affected by risk. A single event can unleash a variety of risks. Risk is omnipresent, omnipotent and omniscient. Risk management is a process effected by the entity’s board of directors, management and other personnel, applied in strategy setting […]

Hazard Management in Foreign Exchange

Back Back is a term portraying the investigation and arrangement of cash, ventures, and other money related instruments. A few people want to isolate back into three unmistakable classifications: open fund, corporate fund, and individual fund. There is additionally the as of late rising region of social back. Conduct fund tries to distinguish the intellectual (e.g. enthusiastic, social, and mental) explanations for money related choices. Outside Exchange Outside trade is the transformation of one nation's money into another. In a […]

Impact of Natural Disasters on Risk Management

Research says threats of natural disasters may continue to rise due to the increase in the average temperature of the water in oceans (Tennyson & Diala, 2016). Weather events will be intense and frequent due to global warming. This will result in rising sea levels and other environmental changes. According to Tennyson and Diala, disaster preparedness is the total of all measures that have been taken and the policies that have been adopted to address a disaster before it occurs […]

Risk Management in Online Transactions

Abstract There has been a significant increase in the number of online transactions on various platforms. Online transactions are boosting the global economy by offering convenience and speed of the money transactions between merchants and customers. For online transactions to be successful, there is a need to have a reliable network that is enhanced by a security system to safeguard the information of the transactions. The networks used to secure online transactions are not entirely effective hence there is need […]

Risk Management in a Banking System

A risk is an essential part of our daily lives. Despite the complexity of this concept, we often and easily operate it in practice, describing a particular life situation. For us, a risk is primarily a possible profit or loss of something. Commercial activities, as well as any other activities related to the formulation and achievement of certain goals, include: situation analysis; strategy formulation; resource planning; organization of a process; measurement and evaluation of results; operational corrective strategic and tactical actions […]

Risk Management – Essential and Complete Corporate Governance System

Risk management is a known element of an essential and complete corporate governance system. It is defined as a mix of activities that effectively reduce the negative impact of risk exposure on the company's projected profits, cash flow, and consequently, the value of the organization. Effective risk management is regarded as an important factor that determines the survival and success of an organization. While risk management is not a new concept, it has recently garnered attention and become moreassertive in […]

Identifying and Managing Business Risks

Introduction A risk is a probability that something with an undesirable effect will occur. Risk management involves steps and policies taken by a company to eliminate these risks or reduce the possibility of their occurrence. A risk management plan is prepared to predict the risks, estimate their impact and severity, and suggest possible responses. Health Network allows clients to access the kind of healthcare services they require over the internet at the right locations. It faces several risks that can […]

The Effects Automation Technology has on Risk Management

Automation technology is the system of controlling a process by highly automatic means, resulting in reduced human intervention. This technology was created to relieve operators from continuous input. Automation benefits users by increasing safety, profitability, and productivity. By the use of machinery products are more predictable, consistent, and the cycle time of production is shorter than it would be if done by man. Though the idea of automatic technology seems fool proof there are disadvantages to it as well. Since […]

Risk Management Techniques for Satellite Programs

Successfully placing a satellite into space requires many elements of a very complicated process coming together, to allow for an on-schedule launch, and nominal operations of the system once on-orbit. Modern day government organizations and private sector companies have become adept at this process, as space launches occur with regularity all over the world. Despite the high success rates seen in the launch and operation of modern satellite systems, risk still pervades these programs, from writing requirements to the ready-for-launch' […]

Enterprise Risk Management Project

Coca-Cola Bottling Company Consolidated was formed 116 years ago in Greensboro North Carolina. Here they started to begin to produce and deliver an ironic brand there. It was all started by J.B. Harrison where he started selling the bottles. In 1955 they started to make 10,12, and 26 ounce family size and king sized bottles. In 1982 they first introduced the idea of Diet Coke. Also, in 2002 they celebrated their 100 year of business. Currently, the company's corporate offices […]

Assessment Credit Risk Management

Credit risk management practices is an issue of concern in financial institutions today and there is needto develop improved processes and systems to deliver better visibility into future performance. There have been controversies among researchers on the effect of credit management techniques adopted by various institutions. According to Saunders and Allen (2002), good selection strategy for risk monitoring is adopted by the credit unions implies good pricing of the products in line with the estimated risk which greatly affect their […]

Issue, Risk and Reputation Management

The proactive behavior, commonly associated with the initiative, creativity, and innovation, is required in today's organizations. It can be a positive differential in times of market turmoil and uncertainty. According to Coombs, the best way to prevent a crisis in an organization is to have a proactive management. Proactive behavior is an element of change and it impacts the company's performance. A proactive management seeks deliberately for changes and improvements, it anticipates the problems and chooses its own course to […]

Risk Management: Role in Security and Establishes the Importance of Assets Within a Company

According to the Principles of Information Security, "risk management is the process of identifying risk, assessing its relative magnitude, and taking steps to reduce it to an acceptable level." Risk management plays an important role in security and establishes the importance of assets within a company. Financial and economic decisions made by a company are heavily influenced by the way risk management is handled. There are many important aspects to risk management, such as: risk identification, risk assessment, and risk […]

Risk Management Section of your Company’s

Read the Risk Management section of your company's 10-K. Do not print the 10-K. In your own words, summarize the risk management strategy. Tie this into the Risk Factors that you wrote in Project 1. Netflix's risk management strategy includes the following: Retaining and expanding its customer base: Subscription fees are the major revenue source for Netflix. Its ability to produce and acquire quality content depends directly on retaining its current customers and attracting new ones. If Netflix cannot satisfy […]

Essay about Risk Management Techniques for Satellite Programs

Either way, this helps to burn down the consequence of only have a sole dedicated relay through redundancy. Another aspect a program manager should consider when assessing risk with ground relays points to the operations crews that run them. An example of a human error causing a space disaster is showcased in the 2009 collision of an Iridium Communications satellite and a defunct Russian communications satellite. With the Russian satellite out of commission, it rested on the Iridium satellite to maneuver […]

Risk Management and Insurance

As people, we are faced with the possibility of loss in our everyday lives. Be it a car accident, illness, Property loss, or even death. As early as the millennia B.C, modern profit insurance was demonstrated in a contract of a loan of trading capital to traveling merchants. The first insurance company formed in the United States was in Charleston, South Carolina during 1732. Later in 1752, Benjamin Franklin helped spread insurance by creating the Philadelphia Contributionship which ensured that […]

Facilities Management

Introduction In any big gathering, crowd control is essential. Sports facilities are protected through crowd control since, where there are many people gathered together there is a high chance for a danger to take place. Secondly, the crowd needs to be managed because when people are in a crowd they always take for granted that other people have the responsibility (Ammon & Unruh 2010). Thirdly, big gathering makes people assimilate changes at a lower phase since they make the process […]

Health Data Breach Response Plan: a Managed Care Organization’s Comprehensive Plan

Response plan on health data breach Introduction Security imperatives of preventing, responding to, and detecting breaches will finally end with good reason and appropriate rejoinder criteria implemented. Breaches in various companies have become inevitable despite efforts put in place to prevent their continuous occurrence. Once there is an unauthorized disclosure, compromise of protected data, or hacking of information that is protected, an organization is obliged to respond. Putting an effective response plan in place is not a small feat. Organization's […]

Additional Example Essays

• Reasons Why I Want to Study Abroad
• "Mother to Son" by Langston Hughes
• The Cask of Amontillado Literary Analysis
• A Class Divided
• “Allegory of the Cave”
• Cinderella Marxism
• Rhetorical Analysis of Steve Jobs’ Commencement Address
• The Girl (Jig) Character Analysis in Hills Like White Elephants
• Dental Hygiene Application Essay
• Their Eyes Were Watching God Literary Analysis
• Things Fall Apart: Character Analysis Okonkwo
• Symbolism in Nathaniel Hawthrone’s “Young Goodman Brown”

1. Tell Us Your Requirements

2. Pick your perfect writer

3. Get Your Paper and Pay

Hi! I'm Amy, your personal assistant!

Don't know where to start? Give me your paper requirements and I connect you to an academic expert.

short deadlines

100% Plagiarism-Free

Certified writers

Essay on Risk Management

Students are often asked to write an essay on Risk Management in their schools and colleges. And if you’re also looking for the same, we have created 100-word, 250-word, and 500-word essays on the topic.

Let’s take a look…

100 Words Essay on Risk Management

What is risk management.

Risk Management is the process of identifying, assessing, and controlling threats to an organization’s capital and earnings. These threats or risks could stem from a wide variety of sources, including financial uncertainty, legal liabilities, strategic management errors, accidents, and natural disasters.

Importance of Risk Management

Risk Management is important because it prepares an organization to face uncertainties. It helps to understand potential risks and to make plans to minimize their impact. Proper risk management can reduce not only the likelihood of an event occurring, but also the magnitude of its impact.

Steps in Risk Management

Risk Management involves several steps. The first step is identifying the risks. The next step is analyzing the risk to understand its potential impact. The third step is evaluating or ranking the risk. The final step is treating or controlling the risk.

Risk Management Techniques

There are several techniques for managing risk. One is risk avoidance, where the aim is to eliminate all risks. Another technique is risk reduction, where steps are taken to reduce the severity of the loss. Risk retention and risk transfer are other techniques used in risk management.

In conclusion, Risk Management is a vital part of any organization. It helps to safeguard an organization’s future through the identification and treatment of risks. With proper risk management, an organization can reduce the negative impact of threats they may face.

250 Words Essay on Risk Management

Risk Management is a process that helps identify, assess, and control threats that could harm an organization. These threats or risks could be anything from financial problems, accidents, natural disasters, or even legal issues. The main goal of Risk Management is to lessen the impact of these risks.

Risk Management follows four main steps. First, we identify the risks. This means we look at what could possibly go wrong. Next, we assess the risks. We try to figure out how likely it is that these risks will happen and how much damage they could cause. Then, we work on ways to control these risks. This could mean coming up with a plan to prevent the risk or lessen its impact. Finally, we monitor the risks. We keep an eye on them to see if they change or if new risks come up.

Risk Management is very important because it helps organizations prepare for the unexpected. It helps them make plans that can prevent or lessen damage from risks. It also helps them save money that they might lose if these risks were to happen.

In conclusion, Risk Management is a necessary practice for all organizations. It helps them identify, assess, control, and monitor risks. By doing this, organizations can prevent or lessen the impact of these risks, saving them from potential damage and loss.

500 Words Essay on Risk Management

Risk Management is a process that helps you identify and control possible problems that might happen in the future. It’s like a safety net that prepares you for any unexpected events.

Why is Risk Management Important?

Imagine you are planning a picnic. But, what if it rains? Your picnic would be ruined. So, you check the weather forecast before planning. This is a simple example of risk management. In the same way, businesses also use risk management. They want to know about any problems that might happen. This way, they can make plans to avoid them or reduce their impact.

Risk Management includes four main steps:

1. Identifying the Risks: The first step is to find out what could go wrong. This could be anything from a machine breaking down to a sudden change in market trends. 2. Analyzing the Risks: Next, you need to understand how big the problem could be. This helps to decide which risks need the most attention. 3. Planning the Response: Once you know the risks, you can make plans to handle them. This could mean avoiding the risk, reducing its impact, or accepting it and making a plan to recover from it. 4. Monitoring the Risks: Finally, you need to keep an eye on the risks and how well your plans are working. This means you can make changes if needed.

Benefits of Risk Management

Risk Management helps in many ways. It can save money by avoiding costly mistakes. It can also help a business to run smoothly, as they are prepared for any problems. Plus, it can help to build trust with customers and investors. They can see that the business is ready for any challenges.

Risk Management in Everyday Life

Risk Management is not just for businesses. We use it in our daily lives too. For example, wearing a helmet while riding a bike is a way of managing the risk of injury. Or, saving money for a rainy day helps to manage the risk of unexpected expenses.

So, Risk Management is a very helpful tool. It prepares us for the future and helps to avoid or reduce problems. It is used in businesses, but also in our everyday lives. By understanding and using Risk Management, we can make better decisions and be ready for whatever comes our way.

That’s it! I hope the essay helped you.

If you’re looking for more, here are essays on other interesting topics:

• Essay on Risk Assessment
• Essay on Robbery I Witnessed
• Essay on Rocket Ship

Apart from these, you can look at all the essays by clicking here .

Happy studying!

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Save my name, email, and website in this browser for the next time I comment.

Risk Working Papers

Recent articles.

The future of bank risk management

Managing supplier risk in the transportation and infrastructure industry

Managing the people side of risk

Voices on bank transformation: Insights on creating lasting change

People and talent management in risk and control functions

A marathon, not a sprint: Capturing value from BCBS 239 and beyond

An executive’s guide to machine learning

Improving disaster recovery

Repelling the cyberattackers

Developing robust PPNR estimates

Taking the stress out of operational-risk stress testing

The age of utility: Are you a force that shapes the power markets, or do the forces shake you?

McKinsey Capital Management Survey 2015

P&L forecasting–the new horizon of stress testing, and beyond

A best-practice model for bank compliance

2014 article archive.

Enterprise-risk-management practices: Where’s the evidence?

Europe’s wholesale gas market: Innovate to survive

Introducing a holistic approach to stress testing

A time for stress: The challenges facing Europe's banks

Risk in emerging markets: The way forward for leading banks

2013 article archive, between deluge and drought: the divided future of european bank-funding markets, risk-based resource allocation: focusing regulatory and enforcement efforts where they are needed the most, getting to erm: a road map for banks and other financial institutions, concrete steps for cfos to improve strategic risk management, between deluge and drought: liquidity and funding for asian banks, managing third-party risk in a changing regulatory environment, next-generation energy trading: an opportunity to optimize, between deluge and drought: the future of us bank liquidity and funding, the hypotenuse and corporate risk modeling, strategic choices for midstream gas companies, strategic commodity and cash-flow-at-risk modeling for corporates, 2012 article archive, managing market risk: today and tomorrow, compliance and control 2.0: unlocking potential through compliance and quality-control activities, driving value from postcrisis operational risk management, day of reckoning for european retail banking, strategic insight through stress-testing: how to connect the 'engine room' to the boardroom, first-mover matters: building credit monitoring for competitive advantage, capital management: banking's new imperative, commodity trading at a strategic crossroad, enterprise risk management: what's different in the corporate world and why, 2011 article archive, the use of economic capital in performance management for banks, assessing and addressing the implications of new financial regulations for the us banking industry, strengthening risk management in the us public sector, day of reckoning new regulation and its impact on capital-markets businesses, new credit-risk models for the unbanked, good riddance: excellence in managing wind-down portfolios, mastering icaap: achieving excellence in the new world of scarce capital, 2010 article archive, taking control of organizational risk culture, a board perspective on enterprise risk management, variable annuities in europe after the crisis: blockbuster or niche product, after black swans and red ink: how institutional investors can rethink risk management, getting to grips with counterparty risk, top-down erm: a pragmatic approach to managing risk from the c-suite, credit underwriting after the crisis, basel iii and european banking: its impact, how banks might respond, and the challenges of implementation, getting risk ownership right, 2009 article archive, upgrading your risk assessment for uncertain times, responding to the variable annuity crisis, best practices for estimating credit economic capital, bad banks: finding the right exit from the financial crisis, risk modeling in a new paradigm: developing new insight and foresight on structural risk, the national credit bureau: a key enabler of financial infrastructure and lending in developing economies, capital ratios and financial distress: lessons from the crisis, 2008 article archive, the risk revolution, making risk management a value-added function in the boardroom, incorporating risk and flexibility in manufacturing footprint decisions, liquidity: managing an undervalued resource in banking after the crisis of 2007-2008, turning risk management into a true competitive advantage: lessons from the recent crisis, probabilistic modeling as an exploratory decision-making tool, "option games": filling the hole in the valuation toolkit for strategic investment, shaping strategy in a highly uncertain macro-economic environment.

Home — Essay Samples — Business — Management — Risk Management

Essays on Risk Management

Risk management is a critical aspect of any business or organization, as it involves identifying, assessing, and prioritizing risks, and implementing strategies to minimize, monitor, and control the impact of these risks. Given the importance of risk management, it is essential to explore various essay topics related to this field in order to gain a deeper understanding of its principles and practices.

Importance of the Topic

The topic of risk management is crucial for businesses and organizations to understand and implement, as it can have a significant impact on their success and sustainability. By identifying potential risks and developing strategies to mitigate them, businesses can minimize the likelihood of financial losses, operational disruptions, and damage to their reputation. Additionally, effective risk management can also help businesses capitalize on opportunities and make informed decisions that lead to long-term growth and success.

Furthermore, risk management is not limited to just financial risks; it also encompasses areas such as cybersecurity, supply chain management, legal and regulatory compliance, and strategic planning. With the increasing complexity of business operations and the ever-changing global landscape, the need for effective risk management has become more critical than ever.

Advice on Choosing a Topic

When selecting a topic for a risk management essay, it is important to consider current and relevant issues within the field. This could include emerging risks such as cybersecurity threats, global pandemics, climate change, or geopolitical instability. Additionally, exploring case studies of successful risk management practices or analyzing the impact of risk management failures can provide valuable insights for an essay topic.

Another approach to selecting a topic is to focus on specific industries or sectors, such as healthcare, finance, manufacturing, or technology, and examine the unique risk management challenges and strategies within each. Additionally, considering the role of technology and data analytics in modern risk management practices can also be a compelling essay topic.

The field of risk management is vast and multifaceted, offering a wide array of essay topics to explore. By delving into the various aspects of risk management, from its fundamental principles to its application in different industries and contexts, students and professionals can gain a deeper understanding of its importance and relevance in today's business environment. Whether it is addressing emerging risks, analyzing case studies, or examining the role of technology, there are countless opportunities to delve into the complexities of risk management through essay writing. Ultimately, by selecting a relevant and compelling topic, individuals can contribute to the ongoing dialogue and advancement of risk management practices.

Fire Prevention in The Workplace

Flood risk management strategies in europe, made-to-order essay as fast as you need it.

Each essay is customized to cater to your unique preferences

+ experts online

Risk Management

Handling the risks is key to corporate success, "bp deepwater disaster plan failure", risk mitigation techniques in information security, let us write you an essay from scratch.

• 450+ experts on 30 subjects ready to help
• Custom essay delivered in as few as 3 hours

Financial Risk in Insurance Industry

How a disaster can affect an organization or business, cybersecurity and risk management, process of risk analysis: the three-step process, get a personalized essay in under 3 hours.

Expert-written essays crafted with your exact needs in mind

Navigating Operational Risk in Banking

Analysis of corporate administration and the management of potential risk in an enterprise, risk management as a key aspect of a business or an enterprise, business risk factors, proposed smart evacuation plan for risk reduction management, tackle risks in neas ambulance service in the uk, the process of risk management in business, health care information security risk management, the credit risk management concept, apache company: risk management strategies, the ‘sleep test’ and how it affects investment decisions, integrated framework of the enterprise risk management, fundamentals of risk management: understanding, evaluating and implementing effective risk management, project risk management practices in the construction industry, definition and features of systematic and unsystematic risk, risks of magement budgets, operational risk management in mauritius, bp deepwater disaster plan failure, a risk management software: usefulness, commercial, and examples, discussion on risk and issues in project management, relevant topics.

• Time Management
• Comparative Analysis
• Decision Making
• Leadership and Management
• Conflict Management
• Total Quality Management
• Knowledge Management

By clicking “Check Writers’ Offers”, you agree to our terms of service and privacy policy . We’ll occasionally send you promo and account related email

No need to pay just yet!

We use cookies to personalyze your web-site experience. By continuing we’ll assume you board with our cookie policy .

• Instructions Followed To The Letter
• Deadlines Met At Every Stage
• Unique And Plagiarism Free

The Owner's Role in Project Risk Management (2005)

Chapter: 9 conclusions, 9 conclusions.

Department of Energy project directors, program managers, and senior managers have the responsibility to assess and manage risks on their projects and project portfolios. Project risks can be managed to successful conclusions through the following basic actions:

Establish and maintain management commitment to performing risk management on all capital projects.

Start the risk management process early in the project life cycle—prior to approval of mission need (CD-0).

Include key stakeholders in the process, with the DOE project director as the lead and the integrated project team (IPT) intimately involved in the process.

Evaluate project risks and risk responses periodically during the project life cycle (CD-0 through approval of the start of operations [CD-4]).

Develop risk mitigation plans and update them as the project progresses.

Follow through with mitigation actions until risks are acceptable.

Tie a project’s level of risk to cost and schedule estimates and contingencies.

Effectively communicate to all key stakeholders the progress and changes to project risks and mitigation plans.

An example of a risk assessment tool that uses some of the risk assessment methods discussed in this report is the Construction Industry

Institute’s International Project Risk Assessment (IPRA) tool. It provides a systematic method to identify, qualitatively assess, and determine the relative importance of specific risks across a project’s life cycle. IPRA consists of 82 pre-identified risk elements that can be assessed according to the likelihood of occurrence and relative impact based on data from a large sample of projects.

Program managers and DOE senior management can contribute to effective risk management by ensuring that project directors and IPTs effectively carry out the actions listed above and by requiring projects to report on the status of all risks and risk management activities in every project status report and at every project review meeting.

Conventional project management is reactive: Senior owner management becomes involved when the project is already over budget, over schedule, and—possibly—underperforming, when it is too late to correct the situation by improving project management.

Active risk management, by contrast, is proactive, directing management attention to uncertainties and risks before the events have happened, when there are still opportunities to do something to avoid, mitigate, or manage them or to stop the project if they cannot be managed. Active risk management is an approach that allows managers to manage rather than just assign blame for failure. Active risk management is the synthesis of the theoretical approach for identifying, assessing, and quantifying risks with the managerial approach for mitigating, controlling, and managing them.

Effective risk management is essential for the success of large projects built and operated by the Department of Energy (DOE), particularly for the one-of-a-kind projects that characterize much of its mission. To enhance DOE’s risk management efforts, the department asked the NRC to prepare a summary of the most effective practices used by leading owner organizations. The study’s primary objective was to provide DOE project managers with a basic understanding of both the project owner’s risk management role and effective oversight of those risk management activities delegated to contractors.

READ FREE ONLINE

Welcome to OpenBook!

You're looking at OpenBook, NAP.edu's online reading room since 1999. Based on feedback from you, our users, we've made some improvements that make it easier than ever to read thousands of publications on our website.

Do you want to take a quick tour of the OpenBook's features?

Show this book's table of contents , where you can jump to any chapter by name.

...or use these buttons to go back to the previous chapter or skip to the next one.

Jump up to the previous page or down to the next one. Also, you can type in a page number and press Enter to go directly to that page in the book.

Switch between the Original Pages , where you can read the report as it appeared in print, and Text Pages for the web version, where you can highlight and search the text.

To search the entire text of this book, type in your search term here and press Enter .

Share a link to this book page on your preferred social network or via email.

View our suggested citation for this chapter.

Ready to take your reading offline? Click here to buy this book in print or download it as a free PDF, if available.

Get Email Updates

Do you enjoy reading reports from the Academies online for free ? Sign up for email notifications and we'll let you know about new publications in your areas of interest when they're released.

• Undergraduate
• High School
• Architecture
• American History
• Asian History
• Antique Literature
• American Literature
• Asian Literature
• Classic English Literature
• World Literature
• Creative Writing
• Linguistics
• Criminal Justice
• Legal Issues
• Anthropology
• Archaeology
• Political Science
• World Affairs
• African-American Studies
• East European Studies
• Latin-American Studies
• Native-American Studies
• West European Studies
• Family and Consumer Science
• Social Issues
• Women and Gender Studies
• Social Work
• Natural Sciences
• Pharmacology
• Earth science
• Agriculture
• Agricultural Studies
• Computer Science
• IT Management
• Mathematics
• Investments
• Engineering and Technology
• Engineering
• Aeronautics
• Medicine and Health
• Alternative Medicine
• Communications and Media
• Advertising
• Communication Strategies
• Public Relations
• Educational Theories
• Teacher's Career
• Chicago/Turabian
• Company Analysis
• Education Theories
• Shakespeare
• Canadian Studies
• Food Safety
• Relation of Global Warming and Extreme Weather Condition
• Movie Review
• Admission Essay
• Annotated Bibliography
• Application Essay
• Article Critique
• Article Review
• Article Writing
• Book Review
• Business Plan
• Business Proposal
• Capstone Project
• Cover Letter
• Creative Essay
• Dissertation
• Dissertation - Abstract
• Dissertation - Conclusion
• Dissertation - Discussion
• Dissertation - Hypothesis
• Dissertation - Introduction
• Dissertation - Literature
• Dissertation - Methodology
• Dissertation - Results
• GCSE Coursework
• Grant Proposal
• Marketing Plan
• Multiple Choice Quiz
• Personal Statement
• Power Point Presentation
• Power Point Presentation With Speaker Notes
• Questionnaire
• Reaction Paper
• Research Paper
• Research Proposal
• SWOT analysis
• Thesis Paper
• Online Quiz
• Literature Review
• Movie Analysis
• Statistics problem
• Math Problem
• All papers examples
• How It Works
• Money Back Policy
• Terms of Use
• Privacy Policy
• We Are Hiring

Risk Management Models, Essay Example

Pages: 4

Words: 1219

Hire a Writer for Custom Essay

Use 10% Off Discount: "custom10" in 1 Click 👇

You are free to use it as an inspiration or a source for your own work.

Risk management incorporates multiple areas of concentration including risk mitigation, prevention and avoidance. Planning for risk in a project allows for the risks to influence the potential success of the project and allows the limited resources allocated to the project to go towards the deliverables and requirements as opposed to using the time and funding for pitfalls or roadblocks that could have been prevented or mitigated.

Planning for Risk

Building a project plan incorporates all three key areas of a project including, schedule, cost and quality. All three of the constraints play pivotal roles in the successful completion of the project (Dobson 2004). The project manager’s role is to ensure the successful implementation of the project and a part of that role is to utilize the appropriate tools and techniques to manage and lead project management activities. The development of the scope, estimation of the budget and monitoring and controlling of the schedule and resources are all key activities. Risk management tools can help manage key project management decisions and influence key decisions on what steps to take to implement the project tasks.

Risk management incorporates the identification, assessment and prioritization of risks and takes those results and establishes a mitigation plan to limit or negated the effects of the risk. The risk management process extends throughout the lifecycle of a project or circumstance and the root cause of those risks can stem from a multitude of sources. Risk mitigation or the management of the risks can be handled in just as many varied ways. The most common actions to reduce the risk exposure are to transfer the risk to another entity, avoid the risk altogether, reduce the probability of the occurrence or just accepting the risk (Alexander and Sheedy 2005). Depending on the goals and objectives of the implementation team there are different ways to handle the risk. There is a basic construct on how to analyze a risk and thus understand which risk assessment method would be appropriate.

The cycle of defining the risk involves first identification of the threat or risk. Once that is understood there is an analysis on the vulnerability to the assets or processes. Now we understand what the risk is and the potential negative ramifications but it must also be understood what the likelihood or probability of the risk occurring. With that information the assessment of the risk can occur and identification of the ways to reduce or eliminate the risk and then prioritize the mitigation measures based on the goals and objectives of the overall strategy.

The major function of a risk assessment is determining the potential loss caused by the risk and the probability of that occurrence happening. The risk assessment also takes into the population of people impacted by the risk. The risk assessment brings together the qualitative assumptions and uncertainties and incorporates a quantitative value to the overall risk. This allows the formulation of a hierarchy of potential impact of a risk. This could then be used to determine the cost and effort needed to mitigate those risks and based on the strategic outlook which risks that would be ultimately mitigated.

Qualitative risk tools involve a highly disciplined analysis of the process to fully understand the potential hazard or risk of a situation (Baranoff 2006). For each event there are ways to improve the probability of it not occurring or removing the risk. One example of this type of assessment is the FMEA or failure mode and effects analysis. This procedure analyzes each potential failure in the process/system and stratifies it by severity. This is fairly labor intensive and becomes exponentially more labor intensive as the project increases in scope. Each failure mode is denoted with the failure, probability, severity, impact and cost to mitigate. All of this is rolled up into the stratification of all of the risks and evaluated against budget constraints.

Another method of risk assessment is the tree based technique. This is used to evaluate in a qualitative and quantitative analysis. This builds a “what-if” scenario and traces back to a root cause of the potential hazard. This can illustrate a series of outcomes to specific scenarios and is highly useful when determining potential risks. This outlines the causal risks and the impacts those risks have on the project or incident.

The risk assessment that suits this project most effectively is a hybrid solution between the FMEA and the fault tree analysis. This is most applicable due to the fact that a detailed analysis will be required for specific scenarios dependent on the type of risks found. The quantitative analysis of the risk, probability, scope and cost will have a direct implication on the efforts afforded to mitigate those risks. The risk assessment tool will provide a fault tree analysis and denote risks through the lifecycle of the project. Risks that have a high probability or significant negative impact will have a full analysis completed. The risks will have mitigation plans associated with them.

Project and Risk Management

Even before the risk management models are used to assess the level, complexity and breadth of the risk there is also the project management methodology of how risk is managed in the project. This is dependent upon the size and complexity of the project. The level of effort to manage and analyze risk is directly proportional with the visibility and complexity of the project. If the project is small and not very complex the risk mitigation plan can be informal and managed through spreadsheets or notes. As the complexity and visibility increase there is a higher dependency upon structure and a systematic approach to the risk identification and mitigation. This allows for more visibility into the risk management techniques and allows for an additional level of accountability both from the project team to the sponsors but also across functional representatives that are working on the project.

As the project’s depth and breadth increase organizationally, the project manager will need to ensure that adequate attention is focused on the risk mitigation opportunities as well as the progress of the project. The models for risk management have their positives and negatives as mentioned before and it is a normal operating procedure to utilize all of the tools available to a project manager to provide as much usable data to make informed business decisions. The key points that the project management must manage include overall project risks including deviations in the triple constraints of resources, schedule and scope as well as the management of the contingency plans just in case something does deviate from the project plan.

While each model can be used exclusively it is all dependent upon the project in which the risks are being controlled. The variables of the project will determine which tools are necessary and which tools present too much of a cost or extraneous effort for the diminished returns they provide. This comes with the experience of the project manager as well as the best practices established by the project management office, organization and business culture.

Alexander, C., and Sheedy, E. (2005). The professional risk managers’ Handbook: A comprehensive guide to current theory and best practices. PRMIA Publications

Baranoff, H. (2006). Risk assessment; 1st edition. AICPCU.

Gorrod, M. (2004). Risk management systems : Technology trends (finance and capital markets). Basingstoke: Palgrave Macmillan.

Hutto, J. (2009). Risk management in law enforcement, applied research project. Texas State University. Retrieved from: http://ecommons.txstate.edu/arp/301/

Stuck with your Essay?

Get in touch with one of our experts for instant help!

Risk in Management, Essay Example

Sponsorship, Essay Example

Time is precious

don’t waste it!

Plagiarism-free guarantee

Privacy guarantee

Secure checkout

Money back guarantee

Related Essay Samples & Examples

Voting as a civic responsibility, essay example.

Pages: 1

Words: 287

Utilitarianism and Its Applications, Essay Example

Words: 356

The Age-Related Changes of the Older Person, Essay Example

Pages: 2

Words: 448

The Problems ESOL Teachers Face, Essay Example

Pages: 8

Words: 2293

Should English Be the Primary Language? Essay Example

Words: 999

The Term “Social Construction of Reality”, Essay Example

Words: 371

Essay on Risk: Meaning, Consequences and Types | Business | Management

In this essay we will discuss about:- 1. Meaning of Risk 2. Fire Fighting 3. Consequences of Risk 4. Types of Risks 5. Business is always Risky 6. Causes of Risk 7. SWOT Analysis 8. Requirement of Good Risk Management 9. Qualitative/Quantitative Analysis 10. Risk Manager 11. Disaster 12. Other Causes.         

• Other Causes

Essay # 1. Meaning of Risk:

Risk is the possibility of an unacceptable outcome or the absence of acceptable outcome. Risk management is identifying and controlling the undesired outcome. Risk may or may not happen and one may not know until it happens and there is always uncertainty. Inherent uncertainty cannot be eliminated. But it is possible to reduce the effect of uncertainty. Dealing with risk means dealing with uncertainty.

ADVERTISEMENTS:

Since the risk is uncertain one has to guess the probability of risk occurrence, consequences and causative factors and manage it. The probability analysis will help to reduce the extent of uncertainty. Risk events are not only uncertain, but also lurk with possibility of loss. Hence need arises for probability analysis. But probability analysis is subjective and so it is not precise and accurate.

Essay # 2. Fire Fighting :

A successful fire-fighting exercise save the people and the organization from fire i.e. crisis. It produces dramatic effect and in contrast a good risk management process is dull and quiet with no excitement. So a firefighter is noticed and rewarded more often than a good risk manager. It is antithesis of risk management but it is the reality. It is impossible to eliminate risks altogether. Sometime risk and uncertainty can be a rewarding experience by opening the gates for new business.

Essay # 3. Consequences of Risk :

Risk affects finance and non-finance matters. But the consequences of all most all risks are measured in terms of money. Despite innumerable risks faced by people in their day to day life the world goes on and so also banks, insurance companies and other financial organizations.

So there is no need to panic or fear the end of the world. What is required is resilience and self-confidence so that one can pull out of crisis and restart the project. Standard risk model include risk event, triggering factor, probability, impact and loss. Concatenation is series of risk events, occurring one after another, their interplay and impact.

Risk management include various steps viz., planning, identification of risk, analysis, prioritization, implementation, monitoring, successfully preventing escalation, mitigation and deal with new risks.

In risk management one has to avoid risk that does not add value and stay flexible in unresolved issues, maintain communication with key functionaries and address risky items first. Risk can be deceptive like an empty petrol drum appearing innocuous but can contain petrol vapour and explode in heat or fire.

ADVERTISEMENTS: (adsbygoogle = window.adsbygoogle || []).push({}); Essay # 4. Types of Risks :

Internal Risks, External Risks, Financial Risks, Technology Risk, Business Risk, Organizational Risk, Cultural Risk, Security Risks, Management Risk, Legal Risk, Environmental Risk, Quality Risk, Process Risk and so on.

I. Common Risks :

Cost overrun, loss of key employees, funds constraints, environmental threats, Unrealistic objectives, Labour strikes, work to rule, complex technology, New unproven technology, non-availability of resources and materials, Unrealistic performance goals, standards that are not easily measurable, Lack of involvement, resistance to change, seasonal and cyclical events, Lack of business experts, Lack of technical experts, Lack of knowledge and skills of business, incompatible organiza­tional structure, cultural barriers, theft of customer data or company information, poor skills and ability of the managers, high volume and complexity of business.

II. Catastrophe Risk :

Earthquakes, Cyclone, floods, landslide.

III. Political Risk :

Government policy, civil unrest, acts of war, terrorist attack and social instability.

IV. People Risk :

1. Lack of motivation, low productivity

2. Dishonesty

3. Theft of real and intellectual property

4. Sabotage, poor quality, conflicts with other team members

5. Lack of discipline

6. Lawsuits, harassment claims.

Essay # 5. Business is always Risky :

Business involves risk although entrepreneurs focus more on benefits from business. Risk is integral and unavoidable part of business. All risks do not generate profit. But profit is the result of risk taking. If there is an opportunity with profit, then there is always element of risk. The success lies in one’s ability to see the profit in the risk. It is important to choose those opportunities where there is less Likelihood of adverse impact. Business is becoming more and more complex and hence there is compulsion to manage complex risks.

If a customer does not get value for money a firm cannot remain in business for long. If a company can identify more options, to deliver value to customers then it is likely to reduce the risk by choosing the best option with less risk. The way to design number of options depends on innovation and research and also SWOT Analysis.

Among the risks demand risk, competition risk and capability risk are very important. Demand risk relates to customer willingness to buy. Competition risk lies with competitor ability to provide better value for money. Capability risk lies with company’s own shortcomings and deficiencies.

Nowadays most companies outsource certain jobs on cost and quality considerations. The moot point is what to outsource? Can it include critical areas of business? Conventional wisdom says ‘No’. It is because outsourcing has its own risk and not risk free.

The purpose of risk management is to eliminate or defuse the adverse impact of risk. But a more important objective is to take full advantage of the risky opportunity and generate maximum profit or benefit as otherwise risk management will become a ritual.

Risk has potential to cause damages to person or property and financial loss, but at the same time, it has a potential for profit. Organizations will take risk when the benefit arising out of risk outweigh the consequences of unde­sirable outcome.

The risk management plan shall contain details of the ways and means to carry-out the risk processes and also communicate the details and the status of the process. Here lies the risk of communication gap which is a common deficiency in every organization.

Bank business consist of deposit mobilization, lending, remittance, collection, transfer of funds, safe deposit lockers, etc. All of them carry their own risk. In addition, customers (borrowers) financial problems, get transferred to bank. The function of insurers is to protect others from risk and consequently carry all those risks on their shoulders so their position is more precarious than banks.

Essay # 6. Causes of Risk:

1. Over confidence on overrated officers

2. Speculative activities

3. Manipulation of accounts

4. Too big to fail attitude

5. Aggressive business model

6. Inadequate disclosure

7. Weak audit system

8. Lack of sound knowledge of business and casual attitude on risk management

9. Vague description of roles and responsibilities.

10. More than one person handling the same job without clear demarcation of duties

A banker wears several caps, accountant, human relation manager, computer savvy, marketing expert with Knowledge of customers business more particularly that of borrowers.

It is not easy to find good number of people in an organization with sound and integrated knowledge on all the above matters. In addition risk measurement requires sound mathematical and statistical knowledge. Most bankers are at best good in arithmetic’s and not mathematics and statistics.

Risk management vary between stable period, uncertain political situations and unpredictable economic conditions. An organization where the top person is a micro manager he will burn himself by his work style and stifle the juniors by not allowing them to do the tasks by themselves.

Indecision, ill-defined job, vague expectation, poor morale, frequent changes, lack of financial resource cause risk. Loss of key personnel, financial constraint civil unrest, terrorist acts, technology breakdown, data loss lack of skill, experience and expertise also cause risk.

Essay # 7. SWOT Analysis :

SWOT analysis is a technique to understand the organization’s Strength, Weak­ness, Opportunities and Threats (SWOT). In view of dynamic nature of envi­ronment every organization should do SWOT Analysis, to understand the relevance of their strength, their vulnerability on account of their weakness, emerging opportunities and the threat from competitors, technological innova­tion etc. It is more important to do so while introducing new products or taking new projects as otherwise the organization will only take blind shots and not a planned risk management.

Essay # 8. Requirement of Good Risk Management :

1. Adequate number of staff

2. Competent staff (Capability, skill etc.)

3. Well-designed training and development programme for staff at all levels

4. A well-organized customer relationship

5. Ongoing efforts to understand the customers need and deliver the goods/ services to their full satisfaction

6. Clear understanding and capacity to tackle known risks

7. Ability to foresee remotely possible risk and plan to manage it

8. Maintenance of check list/log book by everyone involved in risk manage­ment and also line staff. It will help the persons from the missing steps.

9. Risk management decision is always data based. But the problem is that the data are, usually inadequate, imperfect, delayed, or not available; it is rare when one can get all the information needed. Hence the ability to judge whether the missing information is critical or not is important.

10. In real life situation, everyone takes decision with certain level of ignorance or inadequate data and hence risk is unavoidable

11. In risk management “Business as Usual” attitude will not be helpful.

12. People are not infallible and so weak signals or minor symptoms can escape attention.

13. When there is repeated small errors or lapses each by itself may be of little consequence. But cumulatively they will cause catastrophic risk.

14. Assumptions may fail.

15. An easy attitude to acceptable risk may lead to unacceptable level of danger.

16. Men are fallible and if some think they are infallible there is definite possibility of risk.

17. Discrepancy is easy to notice in hindsight, but hard to see in real time

18. Small discrepancies have tendency to enlarge into big problem

19. Failure is functional and there is limit to foresight, so risk manager should know how to contain or tackle the adverse impact of failure

20. Success breed confidence and then complacency

21. Complacency is the cause for accident

Those who believe life is preordained or who have strong belief on fate and destiny or cynic in nature cannot be good risk managers. They will blame on bad time and plead helplessness. A good risk manager is always confident that he can avert the crisis or mishap by predicting and planning to contain the untoward or unexpected happenings.

It is not that the manager will succeed every time. But what is important is resilience that means ability to move on the track despite the failure and tackle new risks.

Focus on Failure:

Success and failure are like reverse and obverse of a coin. Both exist together while success is appreciated, failure is criticized or even punished. Generally it is said ‘play to win and not to avoid defeat’. But it is better to be failure focused in risk management and if failure is identified and tackled in time, it will automatically contribute for growth and success.

1. Unremitting attention to track minor lapses,

2. Sensitive to operational problems,

3. Not to panic in crisis situation,

4. Simplify the complex issues so as to understand them in a better manner are necessary.

Banks are in the business of lending for over 100 years or have experience of several decades. Risk management received sharp focus in the last 30 years, especially after introduction of Basel norms. The credit risk management techniques got sophisticated. Despite all these developments NPA has grown to an alarming proportion. “Poor credit appraisal” by banks is a major cause.

It means inadequate and imperfect risk assessment. In fact, the banks panic when NPA grow overwhelmingly and plunge into action to recover the bad loans expeditiously. That is ok. But for a running organization, more than recovery, streamlining and strengthening, credit risk management is very important for a durable solution to the problem. One time recovery alone will not do. The problem will recur again and again. It is therefore necessary to be focused on failure in order to find a permanent solution.

Chain of Risks :

Good risk management involve systematic attempt to identify possible source of the problems. Sometime it is necessary to examine the cascading or concatenation effect of risk. Every risk event may not cause catastrophe, but cumulative effect of series of minor lapses unchecked and uncontrolled leads to crisis situation.

Being alert to minor issues and problems ultimately help to avoid crisis and firefighting. The likelihood of risk and its impact are two different aspects of the risk event. Risk management team focus is on the consequences of risk and not business opportunities, although opportunities would have given rise to risk.

A risk averse and cautious person decision will differ from bold and brash or pragmatic person. A manager with unduly risk averse attitude cannot help the organization to handle risky opportunities for growth and profit. In risk management it is important to understand and bridge the gap between anticipated and actual results.

In order to understand what risk management “can do” and “cannot do” it is necessary to plan, identify, examine the impact, develop strategies to handle, monitor and control them. A good risk management is always proactive and not reactive or fire-fighting.

It is needless to add that a planned approach will lead to better risk management as otherwise one will suffer surprise and shock. Risk management is required even in a stable and well defined environment. But current environment world over is filled with chaos and complexity. Naturally there will be uncertainty and risk management should deal with uncertainty, chaos, and complexity.

Essay # 9. Qualitative/Quantitative Analysis :

Risk analysis should adopt both qualitative and quantitative techniques in risk assessment. It requires skill to accurately forecast the probabilities of risk occurrence and its intensity. Quantitative measure use both historical data and intelligent projection of the future. While quantitative is numerical qualitative is impressionistic.

Quantitative skill requires statistical and mathematical skill, while qualitative will call for intelligent guess and imagination. Certain amount of vagueness is there in both calculations. But without these calculations one cannot assess the extent of risk and impact.

Essay # 10. Risk Manager :

The operating staff may look at the risk manager’s observations threatening and consider him un-business like and an obstacle. So they may avoid consulting or listening to him. While the risk manager would have discouraged a particular loan because of high risk, Operating staff may be willing to give by charging risk premium on the interest.

Many risk managers recommend implementation of TQM (Total quality management) or ISO 9000 certification for risk reduc­tion although they are primarily meant for quality improvement. Better quality means less risk. But how far the organizations are willing to implement TQM or ISO 9000 is a moot point.

Risk management requires risk assessment, peri­odical reporting, disaster recovery plan, crisis management plan and use risk check list. They may be view the requirements as additional burden on operat­ing staff diverting their attention from business development.

Essay # 11. Disaster :

The biggest disaster the world has seen in recent times is the demolition of World Trade Center in New York. In this case authorities had enough warn­ing from intelligence agencies about terrorist attack on World Trade Center.

The possibility of demolition of the tower by an aircraft was indicated and also the need for emergency evacuation in case of calamitous happening. Yet the disaster occurred resulting in loss of life and property. The event shattered people’s confidence on the ability of the government to protect them. This is a lesson for risk managers. Similar was the case in Bhopal gas leak tragedy.

In both cases repeated warning though vague and recurrence of minor lapses were ignored without applying serious thought. So also in subprime crisis of 2008 in USA and Harshad Metha Scandal in India during 1992, warning signals, were ignored and repeated minor lapses were covered up and consequently huge financial crises engulfed in catastrophic way.

The financial crises in the past were always originated or abetted with dishonest and fraudulent motives of atleast quite a few people in the organization, by taking advantage of the weakness and gaps in system and procedure in the banks. Banks could have easily plugged the loopholes. But it is not done in time due to carelessness and complacency.

Essay # 12. Other Causes :

(1) Problems may relate to machines, equipment’s, staff training and develop­ment, marketing, etc. But many times solutions do not lie with one depart­ment but with more than one department. Engineering problem may need financial solution, marketing problem may depend on H.R.D. solution. The problem is lack of understanding by the concerned departments and lack of coordination between departments.

(2) Sometime risks are identified, but no action plan for the solution is drawn and responsibility fixed on particular person/department.

(3) Vague description of role and responsibilities, haphazard organization matrix, disorganized team of project manager, I.T. Manager and Finance Manager, Internal Conflicts, etc.

(4) So also complex procedure and rules; questionable reliability of support from the top management aggravate the problem.

(5) Lack of focus, absence of reporting system, routine and easy going atti­tude, resistance to change, Lack of trust and openness, lack of culture of encouragement and appreciation of good work, but well entrenched pun­ishment system for errors and such other negative practices create risks.

(6) The managements of the organizations when they retrospect may often find to their horror or discomfiture, that they have failed to do many things which ought to have been done and did many things which ought not to have been done and that have lead to the sorry state of affairs in the organizations.

Related Articles:

• Integrated Risk Management in Banks | Essay | Risk Management
• Risk Retention in Insurance: Meaning and Types
• Stress Test and Insurance Risk | Tools | Risk Management
• Risks in Banking Business | Essay | Banks | Risk Management

We use cookies

Privacy overview.

Captive Insurance as a Risk Management Tool

Captive insurance challenges.

There are several ways that an organization can transfer its risks through commercial insurance in the insurance market. This includes catastrophe bonds, collateralized reinsurance, large deductible plans, weather-based derivatives, risk retention groups, sidecars, and captives. Traditionally, many companies and business organizations manage risk by transferring it to the insurance company. This was attained through insurance policy purchases or fund allocations to meet the expected loss. Currently, many large organizations prefer using captive insurance as a risk management tool. Captive insurance is a type of insurance where the insurer fully owns the company, which provides services to the parent company, majorly risk mitigation. This form of insurance is formed when the parent company cannot find an external organization that will handle the business risks.

Commercial insurance is an effective method through which business organizations relocate their risks. Despite this insurance being an efficient way of diverting unsystematic risks, it has changed the handling of systematic risks (Nguyen & Vo, 2020). It can handle the risks that antedate from unsystematic risk as per the traditional loss history and law of large numbers. It evaluates the relationship between premiums and risk through actuarial calculation (Bickley & Michel, 2018). Systematic risk is challenging to estimate, making it impossible for commercial insurance companies to have difficulties mitigating them (Bickley & Michel, 2018). However, many companies are prepared to pay for the huge premiums that concur with the price of risk in the market. Parent firms have opted for captive insurance to mitigate the inevitable systematic risk because of its benefits in risk transfer and retention.

The organization’s benefits from setting up captive insurance rather than commercial insurance force large organizations to opt for this type. It enables the organization to reduce or stabilize its insurance prices by lowering personal and marketing costs, reducing the financing expenses, and the likelihood of the insurance owners’ to consent to the least underwriting profit (Pierpaolo & Michele, 2017). This program is crucial as it provides the owners with an upper hand during the regulation of the policy, such as shielding the profits of its underwriting policy (Pierpaolo & Michele, 2017). The company using this insurance policy can retain risk so long as they have an excellent loss ratio in the captive. Through the captive, the organization’s insurance premium is dependent only on its loss-making it less vulnerable to the loss generated by other insured parties. Captive insurance is significant as it can cater to the organization’s hard-to-insure or emerging risks. Furthermore, the organization can access the reinsurance market wholesale, thereby decreasing the overheads of the reinsurance to the parent.

The parent organization can access improved risk management and loss control through captives since the company has significant insight into risk control. Reinsures enjoy the benefit of having the insured company involved financially in the risk through the captive (AICPA, 2018). Additionally, certain risks, such as sensitive product liability and environmental impairment, are difficult to handle in the traditional market, irrespective of the claim history (AICPA, 2018). In such events, captive insurance creates a potential solution to boost the financial cash flow linked to risk management. From a broad perspective, captive insurance is a significant source of extended financial strength, attractiveness, and competitiveness for the parent organization (Pierpaolo & Michele, 2017). This insurance has placed risk management on a higher level in most multinational organizations by aligning the support of company boards and their interests. This is vital as it helps the parent company manage and review all the risks presented, incorporating those the organization decided to retain.

However, the development of captive insurance for an organization poses various challenges to the parent company. Its setup requires a significant capital outlay and maximum commitment of resources and time from the parent organization (Kossovsky, 2017). This leads to an increment in the cost of the captive, which leads to a substantial reduction in the premium savings the parent company expected compared to traditional insurance organizations. Additionally, it requires substantial expertise that will help maintain its quality. Achieving this quality requires service providers such as qualified insurance experts.

However, the selected managers need to have varying degrees that align with the parent company’s culture. There is also a challenge in the way insurance companies operate based on the concept of risk pooling. The room for risk spreading may be restricted, leading to fluctuations in the cost. Whenever the parent company’s business plan changes, the captive may not be useful in managing the organization’s risk (Kossovsky, 2017). During such events, the captive’s only way is a run-off, which triggers additional expenses that are not beneficial to the economy and the parent company. Captive insurance has also been associated with illicit activities such as tax evasion, fraud, and money laundering in the insurance market scope. This has made policymakers and regulators mitigate these activities by setting up strong policies such as appointing anti-money laundering officers and including independent directors that are not on the organization’s board. The insurance manager strictly maintains supervisory on the captive insurance because of the illicit activities above.

In conclusion, captive insurance has gained momentum in the current period because of its multiple benefits to large firms. Commercial insurance has a significant problem in mitigating systematic risks despite companies paying enormously to handle the market risk. This has made most organizations shift to captive insurance. The benefits of captive insurance include reducing insurance prices, marketing costs, and financial expenses. Its regulation gives the parent company the upper hand as it can shield its underwriting policy’s profits. The company becomes less vulnerable to losses that other firms have garnered. The company has easy access to the wholesale reinsurance market. However, it has various drawbacks that affect the parent company. It requires significant funds to set up, requires substantial expertise to align with the company’s culture, and is subjected to stringent regulations. Furthermore, it is linked with illicit activities, making policymakers implement tight policies.

American Institute of Certified Public Accountants (AICPA). (2018). Captive insurance entities. Audit and Accounting Guide , 471-480. Web.

Bickley, H., & Michel, G. (2018). Insurance pricing and portfolio management using catastrophe models. Risk Modeling For Hazards and Disasters , 235-246. Web.

Kossovsky, N. (2017). Private equity firms must ensure that captive insurance companies meet stringent government requirements . The Journal of Private Equity , 20 (4), 34-35. Web.

Nguyen, D., & Vo, D. (2020). Enterprise risk management and solvency: The case of the listed EU insurers . Journal of Business Research , 113 , 360-369. Web.

Pierpaolo, M., & Michele, S. (2017). Embracing change: the regulatory evolution of captive insurance companies . Insurance Regulation in the European Union , 377-397. Web.

Cite this paper

• Chicago (N-B)
• Chicago (A-D)

StudyCorgi. (2024, April 15). Captive Insurance as a Risk Management Tool. https://studycorgi.com/captive-insurance-as-a-risk-management-tool/

"Captive Insurance as a Risk Management Tool." StudyCorgi , 15 Apr. 2024, studycorgi.com/captive-insurance-as-a-risk-management-tool/.

StudyCorgi . (2024) 'Captive Insurance as a Risk Management Tool'. 15 April.

1. StudyCorgi . "Captive Insurance as a Risk Management Tool." April 15, 2024. https://studycorgi.com/captive-insurance-as-a-risk-management-tool/.

Bibliography

StudyCorgi . "Captive Insurance as a Risk Management Tool." April 15, 2024. https://studycorgi.com/captive-insurance-as-a-risk-management-tool/.

StudyCorgi . 2024. "Captive Insurance as a Risk Management Tool." April 15, 2024. https://studycorgi.com/captive-insurance-as-a-risk-management-tool/.

This paper, “Captive Insurance as a Risk Management Tool”, was written and voluntary submitted to our free essay database by a straight-A student. Please ensure you properly reference the paper if you're using it to write your assignment.

Before publication, the StudyCorgi editorial team proofread and checked the paper to make sure it meets the highest standards in terms of grammar, punctuation, style, fact accuracy, copyright issues, and inclusive language. Last updated: April 16, 2024 .

If you are the author of this paper and no longer wish to have it published on StudyCorgi, request the removal . Please use the “ Donate your paper ” form to submit an essay.

Healthcare Organizations’ Risk Management Essay

Financial and accounting areas necessary in a risk management plan, professionals working in risk management, defining scope impact, scope impact in healthcare management, steps undertaken whenever a sentinel event occurs in my organization, reference list.

The “term risk management refers to the process of identifying, analyzing, and mitigating uncertainties in every kind of investment” (Singh & Ghatala, 2012, p. 418). Risk management focuses on different strategies that can deal with every projected loss. The process identifies the most appropriate actions towards dealing with risks.

Youngberg (2010) believes that “inadequate risk management will eventually affect the performance of an organization” (p. 27). Risk Management (RM) is a wide field that attracts many professionals. This is the case because risk management is a powerful process embraced in different healthcare organizations. This essay describes the major issues associated with risk management.

According to Singh & Ghatala (2012), many professionals will eventually find themselves in the RM department. For instance, accountants and financial experts should have the required knowledge in RM. Some financial and accounting areas are relevant in every RM plan. For instance, financial accounting is used “to classify, interpret, report, and record an institution’s financial performance” (Youngberg, 2010, p. 39). This area is critical towards dealing with different financial risks.

Youngberg (2010) believes that “some areas such as budgetary accounting, cost accounting, and auditing should be implemented in every RM plan” (p. 41). Forensic accounting investigates different forms of fraud.

The approach minimizes chances of embezzlement. Health Managers (HMs) should also use various financial indicators to monitor the performance of their businesses. Some of these indicators include “liquidity, profitability, and leverage” (Singh & Ghatala, 2012, p. 419). Such areas should therefore be used in every risk management plan.

Organizations should control risks in order to achieve their goals. Risks can affect the performance of many healthcare institutions. Such risks vary from one facility to another.

That being the case, different professionals will find themselves working in risk management. Financial managers and accountants should focus on the best strategies in order to deal with every risk. HMs should also be able “to forecast and deal with various risks” (Youngberg, 2010, p. 82). Medical practitioners should also possess the relevant skills in RM. This knowledge will encourage them to control various risks that might affect their patients.

Project managers should also use their competences to deal with every project risk. Employees working in different areas or departments should also be involved in every risk management plan. Such professionals will provide timely ideas in order to deal with every risk. Insurance Managers (IMs) should also identify various risks that can affect different healthcare institutions (Singh & Ghatala, 2012). This approach will protect the firm from different risks.

This discussion shows clearly that every organization has its unique risks. Healthcare organizations should therefore understand the nature of their potential risks. Psychologists and surgeons should also have the best knowledge in RM. This understanding will “make it easier for many professionals to deal with health risks” (Youngberg, 2010, p. 53). They should use the best strategies in order to deal with every potential risk.

The “term scope impact refers to the effects caused by a harmful event within an organization” (Youngberg, 2010, p. 32). This definition explains why harmful events can affect different aspects of an organization. Some of these aspects include “integrity, confidentiality, and availability” (Youngberg, 2010, p. 43). A “loss in integrity, confidentiality, or availability will affect different areas of an organization” (Youngberg, 2010, p. 32).

For instance, the affected healthcare organization can lose its reputation. It will also lose most of its customers. Every harmful event will eventually affect the financial performance of the targeted hospital. Risk Managers should therefore be able “to estimate the possible impact arising from the scope” (Youngberg, 2010, p. 63).

Healthcare organizations should use the best strategies in order to deliver quality care to their patients. Healthcare facilities can encounter different forms of harmful events. HMs should therefore use Risk Models to understand the major issues affecting their institutions. Some of the “risks encountered in healthcare include misdiagnoses, poor patient support, medical errors, and strikes” (Cagliano et al., 2011, p. 701). Such harmful events can affect the quality of care.

This issue can also result in loss of integrity. The affected healthcare institution will lose most of its clients. The hospital will also have a negative publicity. This event will eventually affect the financial gains of the targeted institution. This illustration explains why HMs should have the best skills in RM.

Sentinel events are common in every healthcare institution. The targeted facility uses a proper strategy in order to deal with every unexpected occurrence. The first step is recording the occurrence. The institution then conducts a detailed study in order to understand the causes of the event.

A proper communication strategy is used to inform the relevant authorities about the event (Cagliano et al., 2011). A response strategy is implemented immediately in order to deal with the event. A Risk Prevention Model (RPM) is then designed in order to prevent future occurrences. Such steps have been critical towards reducing most of the risks encountered in the facility.

Cagliano, A., Grimaldi, S., & Rafele, C. (2011). A Systemic Methodology for Risk Management in Healthcare Sector. Safety Science, 49 (5), 695-708.

Singh, B., & Ghatala, H. (2012). Risk Management in Hospitals. International Journal of Innovation, Management, and Technology, 3 (4), 417-421.

Youngberg, B. (2010). Principles of Risk Management and Patient Safety. New York: John Wiley and Sons.

• Chicago (A-D)
• Chicago (N-B)

IvyPanda. (2024, January 5). Healthcare Organizations' Risk Management. https://ivypanda.com/essays/healthcare-organizations-risk-management/

"Healthcare Organizations' Risk Management." IvyPanda , 5 Jan. 2024, ivypanda.com/essays/healthcare-organizations-risk-management/.

IvyPanda . (2024) 'Healthcare Organizations' Risk Management'. 5 January.

IvyPanda . 2024. "Healthcare Organizations' Risk Management." January 5, 2024. https://ivypanda.com/essays/healthcare-organizations-risk-management/.

1. IvyPanda . "Healthcare Organizations' Risk Management." January 5, 2024. https://ivypanda.com/essays/healthcare-organizations-risk-management/.

Bibliography

IvyPanda . "Healthcare Organizations' Risk Management." January 5, 2024. https://ivypanda.com/essays/healthcare-organizations-risk-management/.

• The Result of a Sentinel Events
• The Sentinel Site for Obesity Prevention
• Results of Sentinel City Windshield Survey
• "Teaching Exceptional Children" by Smith, R. M.
• Sentinel City Community Need Assessment
• The Differences between PP&E and R&M Accounts
• Population Focused Interventions in Sentinel Town
• The Importance of Enterprise Risk Management in Today’s Organizations
• A Sentinel Event at the Emergency Department
• Homeland Security's Risk Management Approaches
• Healthcare Institution Nutrition Strategy and Management
• Healthcare Institution Business Process Reengineering
• Social Service in Health Care Institution
• Healthcare in China: Demographics and a Life Expectancy
• Concept of Therapy in Treatment