The first of the six steps is identifying risks associated with in your organization. These risks can be both internal and external: economic; environmental; social and product responsibility; human rights; and labor practices. By pooling your resources, mainly your employees, into one room you have a better chance of producing a more comprehensive list of risks. An organization’s refusal to acknowledge or accept risk leaves it vulnerable to utter failure (Krivkovich & Levy, 2013, p. 125). If an organization identifies its future intentions without considering all associated risks, chances are they will quickly lose direction.
Once risks have been identified, it is now time to assess and analyze each risk. Risk managers must only accept risks that have been properly evaluated and all relevant factors considered (Connor, 2010). Once a manager has gotten to this stage of the process it is important that a list of pertinent questions be written down to facilitate in the analysis. Assessments should consider the probability that a risk will happen and the consequences of the impact associated with the risk. Many will find it surprisin...
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...to mitigate those risks. To assess the effectiveness of the risk management plan there must be an established set of standards and point of reference information. Routinely revisit the plan and evaluate it for new risks or modify existing risks. After certain actions are successfully completed consider revising the plan and conduct another analysis.
Risk management is most effective when it is an accepted part of a company’s culture Identifying and understanding risk is a factor that must be known by all employees in a company. An effective risk management plan can reduce any adverse effects, diminish losses and eliminate the fear of bankruptcy (Simona-Iulia, 2014, p. 282). An organization must treat risk management as an uncertainty and in doing so can gauge the effectiveness of its methods in terms of accuracy, completeness and timeliness (Schwartz, 2014).
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