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Risk Management in War Game

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Introduction

In the earlier generation, risk management was not a big concern for many organizations.

Managers believed that in business, one should anticipate a positive outcome in the business

setting (Parker, 2009). However, as time progress, more and more enterprises incurred huge

losses due to calamities that could be avoided through proper organizational management. Risk

like floods, corporate fires, theft, and fraud contributed to huge losses to the organization. Risk

management is the process of developing risk control measures, analyzing them, and

implementing them in a way that would help the organization mitigate risk. Over the years,

different organizations have adopted different unique principles to ensure that their organizations

are adequately prepared to tackle any risk that may arise. The organization has used different

theories. One of the most used theories is wargaming. This is a stimulation wargame that

examines historical, current, and future conflicts (Alexander and Marshall, 2006). The game,

according to Romeike (2015), enables the organization to prepare for unseen developments that

may arise from different situations. Furthermore, the game invested in identifying the reaction

patterns of various stakeholders (Gaffey, 2015). This report looks at wargaming simulation

strategies and merges them with the principles of management to show the essence of risk

control in an organization.

Principles of management

One of the essential principles is Risk identification. According to war game theory, it

goes not matter the amount of military personnel that the opponent has, what matters is the

ability to strategize one own self-defenses. Through a proper risk management process, the

organization can create value (Rejda, 2011). When an organization has control of its risk

management, they are at a better place to take up risky venture without any fear. Upon
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identification of the risk may face the Suinzi army, he was able to make necessary defenses that

shielded his soldiers from being overthrown by the hundreds of military that surrounded them. In

the day-today, risk identification entails identifying risks like the likelihood of floods, property

loss, and theft cases that may arise over the cause of operations. Risk identification is essential

since it allows the organization to be fully prepared for the outcome (Gupta, Vollmer, and Krebs,

1996). A wrong identification of risk management may contribute to huge losses. Furthermore, it

also helps in certain objective approach identification. For instance, identifying all root causes of

risk, mapping the potential impacts, and secluding undesirable events facilitate better risk

diagnosis. Finally, through risk identification, the organization can evaluate risk through

performance function and deduce proper goals to be reached by the organization.

The second principle involves risk analysis. After identification of the risk that is most

likely to face the organization, the next initiative is to identify the likelihood of the risk to occur.

Here the organization may classify the risk are tolerant, transferable, termination, and treat.

According to Ann (2015), the four T’s help to classify risk according to threat possibilities. A

low likelihood of occurrence and low-risk outcome requires the organization to tolerate the risk,

low probability of occurrence high-risk occurrence calls for the organization to treat the risk. In

the war game, one of the essential elements is the ability of the players to isolate the less

likelihood occurrence event so that they can concentrate on the event that has the greatest

possibility of occurrence. In most, the most catastrophic risk that can occur is the loss of lives.

Therefore all the events that can lead to death like chemical linkages, floods, and terrors attacks

are prioritized. The next category is the events that may lead to huge losses to the company.

Through risk analysis, the organization can sieve the most threatening risk and concentrate on
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resolving and strategizing on ways to avoid them. The highest risk that faced the suizi solders the

number count, which was not favoring them.

The next principle is risk control. This principle offers the opportunity to avoid, reduce,

and prevent risk from occurring. In the case of the war game, risk avoidance would be to

formulate a way that would help suizi solder have the upper hand over the rival military soldiers.

However, even after identifying a way to do this, there is still the risk of many soldiers losing

their lives on the battleground. It is vital to understand that risk avoidance aims at reducing the

likelihood of risk occurrence but not eliminate the risk (Chong-fu, 1999). In reality, risk control

involves two major: initial control and contingency plan. Through the initial control, the

organization can formulate risk control methods based on the anticipated occurrence. In the case

of war-gaming, the players anticipate the move that the opponent will make and prepare t

counter-attack. When it comes to contingency planning, the organization prepares for an

outcome that is not usually expected (Heimann, 2000). For instance, in a bank, the expected risk

occurrence is theft and loss of money through hacking. However, the probability of fire in banks

is low though they can occur. In the war games, players prepare for even the smallest risk

occurrence. In a business setting, the organization may consider various strategies for risk

control programs or enact new strategies and techniques based on the analysis done on the risk.

Risk financing is the fourth principle. This process is designed to compensate/finance

loss that the control risk technique implemented to resolve. There is no way the organization can

be able to control all the risks. Some risks are sudden and unanticipated; hence, the organization

can only set aside some money to finance such risk. In the war game, not all the players are sure

to win. There are some cases where players who have exhausted all the risks end up being

defeated. This is as a result of neglect of a simple risk that seemed insignificant at the moment.
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In most cases, the organization should take an insurance cover that will guarantee financial

assistance in case of unforeseen risk occurrence in the business. The importance of risk finance is

that it allows the organization to distribute the risk over a large number of customers. As a result,

the financial burden can be shared among many stakeholders (Pennock and Haimes, 2002).

The last principle is the management claim. The organization normally files a claim for

damage in the case of the occurrence of the loss insured against. The insurance company

investigates the claim, and after identifying that the cause of the risk was indeed the insured risk

compensates the organization, the amount equivalent to the loss occurred. In most cases, the

insurance company conducts an assessment that tells the insurance company how much they are

expected to compensate the company. However, if the cause of the risk was not as a result of the

insured risk, the company will be required to use its own money to finance the risk. For instance,

if the company insured itself against fire and fire burns the company, but during the fire, some

rooters steal assets, the insurance company will only pay for the damage caused by fire, not the

one caused by rooters.

Conclusion

Risk management is one of the most vital aspects in the organization currently. Most

managers are busy strategizing on ways of ensuring that all possible risk is mitigated for a more

productive organization. Through these five principles, the organization is safer and come be

able to take up more risky ventures without fears of external or internal risk causes.
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References

Alexander, C. and Marshall, M.I., 2006. The risk matrix: Illustrating the importance of risk

management strategies. Journal of Extension, 44(2), p.2T0T1.

Ann D., 2015. SVP Healthcare Risk Management and Patient Safety. 5 basic principles of risk

management. Retrieved from https://www.sedgwick.com/blog/2015/09/10/5-basic-

principles-of-risk-management

Chong-fu, H.U.A.N.G., 1999. BASIC PRINCIPLES OF RISK ANALYSIS OFNATURAL

DISASTERS [J]. Journal of Natural Disasters, 2.

Gaffey, A.D., 2015. Fall prevention in our healthiest patients: assessing risk and preventing

injury for moms and babies. Journal of healthcare risk management, 34(3), pp.37-40.

Gupta, S.K., Vollmer, M.K. and Krebs, R., 1996. The importance of mobile, mobilisable and

pseudo total heavy metal fractions in soil for three-level risk assessment and risk

management. Science of the Total Environment, 178(1-3), pp.11-20.

Heimann, J. F. (2000). Contingency planning as a necessity. Paper presented at Project

Management Institute Annual Seminars & Symposium, Houston, TX. Newtown Square,

PA: Project Management Institute.

Parker, D., 2009. Managing risk in healthcare: understanding your safety culture using the

Manchester Patient Safety Framework (MaPSaF). Journal of nursing management, 17(2),

pp.218-222.

Pennock, M.J. and Haimes, Y.Y., 2002. Principles and guidelines for project risk

management. Systems Engineering, 5(2), pp.89-108.

Rejda, G.E., 2011. Principles of risk management and insurance. Pearson Education India.
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Romeike, F. ,2015. Learning from the future: Simulation with business wargaming. RiskNET.

Available at: https://www.risknet.de/themen/risknews/simulation-with-

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