TOPIC 2

RISK MANAGEMENT

Risk Management is the process of identification, assessment, implementation,

evaluation and monitoring. Because it is a process it follows steps, you have to follow
the step, you have to follow first the identification, assessment, implementation,
evaluation and monitoring.
 Identification is a fundamental and necessary. The correct identification is the
correct of the process, and the wrong identification means there is something
wrong at the end of the process.

Identification: Identification is the process of determining the risk attached to you, so

that you can make a plan or analysis on how you’re going to deal with it, what are the
things to do to prevent the risk coming. In short if you do not know the risk attached to
you, you find it hard in mitigation, and counter measure of it. It is important because it
will be the basis of the 4 along the process.

IMPORTANCE OF IDETIFICATION
1. It helps identify the correct process.
2. It helps to make a decision and plan.
3. It helps to have a quick decision, it is the basis of decision making.

Assessment: Referring to the damages, referring to the occurrence of the risk. That’s
why assessment needs money to counter the risk coming. That’s why you need to
consider priority decision in the assessment, risk treatment and the strategy.
1. PRIORITY DECISION:
a. Higher the risk, higher probability of impact; High probability and higher
impact
b. Higher impact and lower probability
c. Lower impact and lower probability
2. TREATMENT: it follows the priority decision
3. STRATEGY: counter measures or strategy that can lessen the impact of the
risk that occurs.
a. Transfer or share the risk from a party to another (INSURANCE)
b. Reduce the negative impact of the risk (REDUCTION OF RISK)
c. Accept some or all (ACCEPT SOME RISK TO ALL RISK SPECIFIED
TO THE EXPOSURES)
Implementation: All of those risk treatment, risk priority process, risk strategy will be
applied here. If you have a good strategy but not being implemented that will be
useless. If you have a good plan, good strategy, good implementation and good
assessment everything in the priority decision must be properly addressed and properly
being implemented during the priority decision process.

Evalaution: To determine if the implementation of the strategy is proper or good

strategy.

Monitoring: You have to keep an eye of all the implementation that you’ve done during
the implementation process because from time to time there is a mitigation or risk
mitigation will change, because the counter measure or the risk is temporary, and it will
change without prior notice. By the time the strategy is no longer effective you can
easily change the strategy or go back to number one to trace what must be the problem

Managing risk is a cycle of identification, assessment, implementation, evaluation and

monitoring, that is risk management

TOPIC 3
What is Risk Identification?
Risk identification is the process of determining potential risks to your business. This
can include anything from a natural disaster that could damage your property to a
disgruntled employee who could sabotage your systems. As a business owner, you’re
constantly faced with risks. Some are bigger than others, but they all have the potential
to impact your bottom line. That’s why it’s important to have a system in place for
identifying risk.

When you know what the risks are, you can weigh the pros and cons of any decision
and make an informed choice that’s best for your business. Risk identification is a
critical part of a robust risk management system and a key tool for running a successful
company.

Why is it Important?

When you’re running a business, it’s important to be aware of the risks that come with it
and to communicate it. That’s where risk identification comes in. By identifying and
assessing the risks, you can come up with a plan to mitigate them.

Risk identification is an essential part of any business, but it’s especially crucial for small
businesses. For one, small businesses are more vulnerable than larger ones, so they
need to be extra vigilant about risks. And for another, small businesses have fewer
resources to fall back on if something goes wrong.
But why is risk identification important? Here are some reasons:

 It helps you understand what could go wrong and how you might be able to
prevent it.
 It allows you to put together a plan for dealing with any potential risks that might
arise.
 It helps you make better decisions when it comes to your business.

By being aware of the risks, you can take steps to protect your business and minimize
the chances of something going wrong. Risk identification—along with other functions of
a comprehensive risk management strategy such as risk assessment, risk analysis,
and risk control—is an essential part of good business practice, so make sure you are
fully aware of the risks involved in your industry.

What are its Benefits?

When it comes to risk identification, there are a few key benefits that your business can
reap:

 Identify potential threats to your business. This includes both internal and
external threats, so you can be prepared for anything that comes your way.
 Assess your business’s vulnerabilities. Once you know where your weak spots
are, you can take steps to shore them up and protect yourself from possible
attacks.
 Make better decisions. By understanding the risks involved in any given situation,
you’ll be able to make more informed choices and avoid costly mistakes.

Overall, risk identification is an essential part of any successful business strategy. It

allows you to identify potential threats before they cause damage and helps you make
sound decisions based on accurate information.

The Process of Risk Identification

When it comes to risk identification, a few key steps need to be followed in order to
ensure that all possible risks are considered. Let’s go over them briefly:

1. Risk Statement

The first step is making a risk statement. This is a brief, concise description of the risk
that you’re looking at.

2. Basic Identification

In this step, you will list all the relevant facts about the risk. Examples include what
could happen, who could be affected, and so on.
3. Detailed Identification

This is where you go into more detail about the risk, including what could cause it and
how it could affect people or businesses. Here, you can use various methods such as
brainstorming, interviews, and documentation.

4. External Cross-check

In the external cross-checking step, you will look for any potential risk or relevant
information outside the project. Some methods you can use are checklists and
categories.

5. Internal Cross-check

This is where you look for any potential risks inside the project that may have been
missed in the previous steps. To do internal cross-checking, break down a work
structure or a project document in order to list down any potential risks.

6. Statement Finalization

The last and final step is statement finalization. This is where you put all the information
together and come up with a final statement about the risk.

Strategies for Identifying Risks

When it comes to risk identification, it’s all about being proactive. You need to be
constantly on the lookout for potential threats to your business so that you can take
steps to mitigate them before they become a problem.

How do you do that? There are a couple of different methods you can use. Below are
some examples you can use:

 Brainstorming – It involves coming up with a list of all possible risks that could
affect your business.
 Interview – Interview your team members, customers, and suppliers to get their
thoughts on potential risks.
 Online resources – Some good examples of these are enterprise risk
management blogs and forums. They can be a great source of information on
new and emerging risks.
 Checklists – A risk assessment checklist usually consists of a list of common
risks with their causes and typical impacts. It is often used once and aimed at a
specific market or technology area.
 SWOT analysis – It is a great method to understand business risks or project
risks using different factors—strengths, weaknesses, opportunities, and threats.
  Root cause analysis – The root cause analysis method analyzes and
investigates a past risk of the project by comparing how they relate to the current
project.
 Flowcharting – A flowchart helps in showing the activities and decisions thru
illustration. It also shows the flow of data and control through a specific area.

Common Risk Identification Mistakes

When you don’t take the time to identify risks, you’re opening yourself up to a lot of
potential problems.

For starters, you could end up making costly mistakes if you don’t understand the risks
and hazards associated with your business. Also, if you’re not prepared for potential
risks, you’re not going to be able to respond quickly when they occur. That could lead to
some serious damage to your business.

Finally, as a stakeholder, if you’re not aware of the risks involved in your business, you
could be making decisions that are putting your company at risk and reducing its life
cycle. So it’s really important to take the time to identify and assess all the risks involved
in your operations.