Professional Documents
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Introduction
Everyone understands the concept of risk; people use it every day and take
chances daily, whether they recognize it or not. When weighing the benefits and
drawbacks of any decision, people are also weighing the risks. Any company and
organization face the possibility of unanticipated, damaging events that could cost them
plan for the unexpected by reducing risks and additional costs before they occur. The
and earnings is known as risk management. Financial insecurity, legal liability, strategic
management mistakes, incidents, and natural disasters are just some of the challenges
or hazards that could arise. For digitized businesses, according to Cole (2020), IT
mitigate them, have become top priorities. There are common problems with insurance,
claims, and risk in general in every industry, from the small corner store to the large
manufacturer. Buildings can be destroyed by fire, people can slip and fall, car accidents
happen all the time, and faulty goods can cause losses. Understanding risk
management and learning to control liability is more important than ever for an
organization's success.
This paper discusses the issue of inadequate risk management in the workplace.
It is a normal occurrence in a society that has not yet been fully resolved. Furthermore,
this problem is widespread, particularly in the business world, and the world of
potential solutions that may have a significant effect on the problem-solving situation
The future is a challenge for risk managers. Even so, looking back in time can be
instructive and motivational at times. Knowing the past of risk management is a way to
understand its main usage and appreciate more its coexistence in the society especially
Some scholars claim that gaming spawned the first definition of risk
management. People in various ancient cultures played games with dice and bones
thousands of years before Internet users could play online poker. Also, about two
thousand years ago, people played games that developed into chess and checkers.
Dante and Galileo's writings provide some historical evidence that gaming spawned
probability theory, which is significant in risk management. In the 1600s, the renowned
According to Rhodes in his article about “A Brief Summary of the Long History of Risk
Management,” Corporate risk management was a profession long before the term "risk
manager" was coined. In England, for example, the first actuaries worked for a
forerunner of today's life insurance business as early as the 1700s. However, it is likely
that even earlier examples will be found. When people-controlled companies, armies, or
whole countries in the past, there were undoubtedly people working to handle risk using
started after World War II. Risk management has long been synonymous with the use of
insurance during the 1950s, when market insurance was prohibitively expensive and
insufficient for protection against pure risk. Derivatives were first used as risk
management instruments in the 1970s, and their use grew steadily in the 1980s as
businesses tightened their financial risk management. In the 1980s, international risk
regulation began, and financial companies developed internal risk management models
and capital estimation formulas to protect against unanticipated risks and minimize
integrated risk management was implemented, and chief risk officer roles were
Similarly, Hay-Gibson (2008), the historiography of risk and risk assessment may
be used to assess the subject's background. As a result, the past of risk management in
this study can be traced back approximately 50 years. From the 16th century CE
onwards, evidence is accumulating for the subject's growth. The direction of creation of
risk management has not been evident in terms of historiographical analysis. Instead,
historical evidence from papers and terminology development shows that risk, as a
social and academic topic, has both expanded and lost touch with some of its roots,
considering such technical and socio-cultural events as the advent of war and the
construction of the backbone of telecommunications and electronic document transfer
On the other hand, insurance agents were the first to create a risk management
process. They devised the method to shield their insurance company from financial ruin
by assisting clients in reducing losses and therefore liabilities (payout). Their success
piqued the interest and drew the attention of corporate executives seeking to reduce
their own business risks. Russell B. Gallagher is widely regarded as the founder of
today's Risk Management structure, as well as the author of the first risk management
books. The early stages of this phase have since grown into their own career sector.
The business program is being supplemented with specialized college courses. Most
companies expect risk managers to have a bachelor’s degree, if not an MBA. In its
simplest form, the first step in risk management was to identify, evaluate vulnerability,
one's area of business or trade. This necessitated a high level of trust between
ownership and management. In certain cases, the course was trial and error, and the
tuition was profit loss. They had to always keep a finger on the pulse of their business.
A company's risk management decisions could put it on the verge of bankruptcy or put it
out of business entirely. If business owners did not remain informed about market
trends and economic indicators, or if they were too complacent and overconfident, they
would face financial ruin. The fast-shifting prices of goods and services, as well as the
loss of currency value stability as fixed parities became less predictable, ushered in a
revolution in the philosophy of financial risk management in the 1970s. The Capital
Asset Pricing Model (CAPM) is the model that most current theories of portfolio
management are focused on. This was established in the 1950s and 1960s, but only
OF RISK MANAGEMENT”)
A risk management strategy may influence the detection and review of possible
risks that might jeopardize the project, as well as the approaches people can use to
The impacts of risk on business or corporate priorities and objectives are more
meaningful to the operating entity for certain programs or initiatives. Risks are weighed
against the likelihood of a negative effect on the company's objectives. The use of risk
assessment software for the organization and its components will aid in risk
determination consistency. Even when the solution sets are the same, the risks can be
military operation and the impact of the enterprise on mission success versus risk of
The study concludes that each risk event is evaluated for its potential effect on
the project. This evaluation usually considers how the event might affect expense,
schedule, or technical performance goals. However, the implications are not limited to
the evaluation impact to the decision process when evaluating risk. Risks are usually
According to Gibson (2013), even before the people get to their insurance plans,
a successful risk management plan saves the money. Lower operating costs and more
benefit result from increased productivity and less losses. Good risk management can
also minimize the people’s risk exposure, resulting in lower premiums or even the ability
to reduce the coverage level. Risk is not anything to be taken lightly. It is not a spectre
that might destroy the company at any time. it is a factor in how people run their
business, but it is not one that can be effectively handled. Risk will potentially help
people improve their company if they use the right risk management approach. Risk can
be a very beneficial aspect of your company. A good risk management policy is about
more than just avoiding catastrophe. Risk management done correctly will help you
grow as a business.
Ten Six (2017) stated that there is also negative impact on the poor risk
management. Poor risk management can have a significant negative effect on the
company. Bad risk management is something people cannot afford, whether it is due to
a delay in project benefits affecting the sales and profit streams, or one of the other
1. Poor User Adoption - the process of getting the team members to implement
a process, use the resources one person mandated, and adhere to the
approach is known as user adoption. If they do not, they will get mediocre
can eat away at them over time due to ineffective management practices. Any
additional administrative activity adds expense and time to the project when
the team is not operating effectively, which has an effect on how easily – if at
prepare management strategies to monitor, act on, and track them. Delays
may also occur when risk management tasks take longer than anticipated,
4. Overspent Budgets - Risk management is not cheap. The cost of coping with
problem for the business, on the other hand, is usually much, much higher.
Budget overruns occur when risks and the measures required to efficiently
manage them are not budgeted for. Overspends are often normal when a
danger is not detected at all and the project team needs to scramble to find
that is always caught off guard. Your clients must have confidence in your
ability to manage risk effectively. This follows on from the previous point:
single negative review may have far-reaching consequences for future work.
7. Project Failure - In the end, failing to properly handle risk will result in the
business case's goals are not met, and they have squandered much of the
time and money they have put into the project so far.
Likewise, Oehem et al. stated that risk management is getting a lot of attention
because it is seen to cut costs, shorten timelines, and increase technological efficiency
strategies are linked to the remaining two categories of outcome measures (project and
product success) and are linked to the first three categories of outcome measures
Neglecting an impact risk can jeopardize people's or the planet's outcomes; thus,
businesses and investors must view these risks separately from financial risks. The
three data categories under the ‘Risk' impact dimension include a roadmap for
evaluating and minimizing impact risks for businesses and investors. Risk management
is the process of identifying, analysing, and responding to risk factors that arise over the
Poor risk management has the potential to have a significant negative effect on
deal with threats, weak risk management is something that no business, agency, or firm
can afford. When people are unable to handle risks, they will experience project delays
and, in certain cases, failure. It wastes time, does not finish the job, even if it does, it
does not communicate the importance. As a result, the time and money have been
wasted. Clients, overall, do not want to get involved in something that carries a high
level of danger. They want to know what is going on and what people doing to mitigate
the risks to the company. When they say risk management, they are saying that it costs
money.
However, if the risk proves to be a real problem for the business, the cost of
coping with it would be much greater than the expected. Overspending on the budget
occurs when the risk is not detected. As a result, the team attempts to raise funds until
the project runs out of steam. User acceptance is the process of getting the team
members to implement a process, use software, and adhere to best practices. There
would be bad results and a rise in risk control if the office staff does not comply
(FinanceGab.com, 2018).
The discussion of Ronald and Subiyakto (2016) in a research gate, due to the
resource, and stakeholder factors, any project will inherently have risk. Most project
stakeholders, especially managers, are often unconcerned about it. Apart from agreeing
with the previous viewpoints that place a premium on the planning stage of a project,
people believe that risk management should be a priority during the project
occurred at the mid or end of the stages, how to handle the situation and repair the
The Risk Specialists (2017) added that the poor risk management can have a
Below are a few of the most significant impacts of poor risk management:
When risk management activities take longer than anticipated or scheduled, the
project may be postponed. Unforeseen threats may also have a huge effect on project
schedules, delaying projects substantially due to the time required to understand and
analyse them.
and the activities that go along with them are not properly budgeted for,
budget overruns are common. Overspending can also happen when a risk
is not detected.
Clients do not want to be a part of something they consider to be high-risk.
They need to know what they are doing to minimize any possible risks, as
processes in any way. People get bad results if the teams do not really
Similarly, poor risk control costs a lot of money. Emerging threats catch
project managers off balance. And these dangers may develop into problems
since any company and business faces the possibility of unanticipated, damaging
events that could cost them money or force them to close permanently. Risk
1. Be clear about your remit - Any obligations holes in the company raise the
2. Identify risks early on – It is never too early to begin considering risk. The
quicker they take action, the less difficult it will be to handle the risk. Many of
management.
3. Be positive - Not all threats are bad, so do not concentrate only on the
distinguishes between cause and effect as part of the risk evaluation process.
5. Estimate and prioritise risk - Assess and prioritize all identified risks using a
risk matrix. The probability (likelihood) and effect of a risk can be used to
6. Take responsibility and ownership - Take responsibility rather than waiting for
7. Learn from past mistakes - Make use of historical data and anecdotes to learn
8. Use appropriate strategies to manage risk - Use the 4Ts model to determine
known as tolerating risk (it still needs to be monitored) Treating risk entails
9. Document all risks in a risk register – people will be able to see 'the bigger
picture' of the entire risk exposure by collecting all risks across the business,
10. Keep monitoring and reviewing - The level of risk the people face shifts over
time, with new threats arising and others becoming less dangerous. People
will be able to respond when the time comes if they are vigilant and
In addition, Risk exists everywhere, and having a risk management plan in place
in the workplace is critical. Not only does this entail all of the above, but it also entails
educating the employees on what constitutes risk, so they know what to look for and
unpredictable, staying "in control" is a relative term. There is no such thing as a risk-free
company or a risk-free boss. Clarity on what is required of managers and staff workers
would help the business’ culture. There must be clear communication about what
constitutes acceptable conduct and what does not, as well as the acceptable ranges of
deviations from specified goals. Establishing a formal process for handling the business
charters, procedures, orders, and other key policy and procedure documents would be
beneficial.
Moreover, the primary goal of all risk management, internal control, internal audit,
and other support functions activities is to help the company achieve its goals. The
results of risk assessments are merely predictions about the future. Factors including
involved colour these studies significantly. Risk forecasts should provide business
managers with a more balanced view of the future — in other words, they should
provide opportunities.
A danger that falls into the top category should take precedence over the others,
and a strategy should be placed in place to avoid, or at the very least minimize, these
risks. There is, nevertheless, a catch. If a risk is on a lower rung but has the potential to
expense of uninsured risk, purchasing insurance help people to pass the risk to
insurance providers at a low cost. If people want to run a long-term company, they need
ensure the best quality, make sure to test the goods and services. If people just getting
started, make it a rule that buyers with bad credit must pay in advance, which will help
them prevent problems down the road. To do so, people need a system in place that
allows to spot bad credit risks ahead of time. This is directly related to employee
preparation. If they sell goods and/or services and set high expectations for the
employees, they can be tempted to take excessive risks, which can damage the
company's reputation. Instead, teach the staff to prioritize consistency over quantity.
2020).
Apparently, according to De-Risk (2019), there are set of stages in project risk
models for team members to complete are also popular strategies for identifying risks.
expressed as a percentage probability of the risk occurring (if no action is taken), but it
Prioritize: This is usually achieved by multiplying the impact and likelihood to get
a 'risk exposure.' As before, this will either be a number or an HML style scale. After
that, risks are usually prioritized from the highest to the lowest risk exposure.
Risk Reduction/Resolution: Breaking down risk mitigation into phases and determining
Risk Monitoring: Choosing the governance mechanism for how management can
track risk management plans and ensure that they are carried out, such as holding daily
risk meetings, including risks on the agenda of project meetings, virtual meetings, and
so on.
Conclusion
Risk management is the mechanism by which companies define, evaluate, and
react to threats that may have an effect on their operations. Risk management is the
process of making and implementing decisions that reduce the negative effects of risk
insurance premiums and claims expenses, or subjective and difficult to measure, such
as reputational harm or reduced productivity. A business can protect itself from volatility,
minimize costs, and increase the probability of business continuity and profitability by
concentrating attention on risk and investing the required resources to manage and
mitigate risk. The history of risk management can be traced back decades ago and it is
still important in maintaining the good qualities of a successful business. However, there
are poor risk management that would broadly affect the enterprises. Poor risk
Whether it is a project delay or failing to take the appropriate measures to deal with
threats, weak risk management is something that no business, agency, or firm can
afford. On the other hand, there is no problem that has no solutions even the poor risk
management. There are ways on improving the risk management to guide the company
or the business. Hence, it is possible to have a good and leading future by properly
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