RISK:

Chances of harm or loss and uncertainty in business is called risk. It measures the uncertainty
that an investor is willing to take to achieve a gain from the investment.
RISK MANAGEMENT:
Risk management is about identifying, analyzing risks and drawing up plans to reduce its effects
on brand or business. It is a probability that some adverse circumstances will occur. Effective
risk management means attempting to control to the possible extent, future outcomes by acting
proactively rather than reactively. Risk management process is based on firstly identifying risk
then assessing risk after that taking step to regulate risk and final is to review the control.
Risk in logistic operations will be calculated through formula which is:
Risk management= Likelihood * severity
Likelihood and severity will be calculate on 1-5 Likert scale by multiplying likelihood with
severity we will get to know the probability of risk. If it is one on Likert scale then it means it is
negligible and risk increase along with number, 5 means it is better to stop because there is a
high risk.
Risk can come from within the company or through the factors which are beyond the control of
company. Risk can be financial, strategic, and operational or hazard risk.
Treatment of Risk:
These are the options to treat risk
1. No risk no game
2. Eliminate the risk.
3. Reduction of the risk.
4. Financial burden sharing