TOP QUESTIONS• What is risk management?• Who uses risk management?• How risk management is used?
What is Risk Management?• It is the name given to a logical and systematic method of identifying, analyzing, treating and monitoring the risks involved in any activity or process.
Risk• An expression of possible loss in terms of severity and probability
Who uses risk management?• Both public and the private sectors covering a wide range of activities or operations. These include: Finance and Investment, Insurance, Health Care, Public Institutions, Governments
What are the benefits of risk management?• More effective decisions• Efficient allocation of resources• Increased standard of accountability• Creativity & innovation in management• capacity to manage competing issues• Flexibility in meeting objectives• Transparent decision making
Why Do We Manage Risk?• Project problems can be reduced as much as 90% by using risk analysis• Positives: – More information available during planning – Improved probability of success/optimum project• Negatives – Belief that all risks are accounted for – Project cut due to risk level
How do we manage risk?• There are steps which serves as generic guide for any organization, regardless of the type of business, activity or function.• There are steps in the RM process
Risk Management Rules• Integrate into planning• Accept no unnecessary risk• Make risk decision at a proper level• Accept risk if benefits outweighs the cost
Summary• Risk Management is a systematic way of thinking• Risk management process increases awareness of hazards and risk involved in an operation