TOOLS AND TECHNIQUES OF

RISK

Submitted by
ANIKET GUPTA
20MC205004
 RISK MANAGEMENT

Risk management refers to the

practice of identifying
potential risk in advance,
analyzing them and taking
precautionary steps to reduce
risk
Stages involve in risk management
1. Risk identification
Risk identification is not easy to analyze so this is
where the following tools and techniques help
to discover hidden risk.

• The Delphi technique

• Root cause analysis
• Diagramming technique
• Bench marking
 In this panel of experts are asked to
The Delphi answer questionnaires in a series of
technique rounds. The idea is to get unbiased
information that the experts agree on.

Root cause • It helps at the cause of problem to

find out whether the full effect can
analysis be prevented
 • this is a compact version s of risk.
Diagramming This includes cause and effect
technique diagram, flow charts and influence
diagram.

• In this the comparison between

periods or departments.
Benchmarking Anomalies in benchmarking data
can spot risk that may have been
missed.
2. Quantitative analysis
Tools technique can be used to numerically
analyses the impact a risk will have on an
organization.
• Failure modes and effects analysis
• Sensitive analysis
• A decision tree

Failure modes • It is the evaluation to determine how

and where a process might fail. Action
and effects is then taken to address the parts of
analysis the process where failure is likely.
 • In this different variables are
Sensitivity introduce to show the impact
on the risk. This analysis shows
analysis what would happen if
prediction fail to materialize.

• It is a diagram with branches

A decision that show the outcomes of
different decision and random
tree events. It shows the financial
impact of different outcome.
3. Qualitative analysis
qualitative risk analysis tools and technique
can help to decide which risk to focus on.
• Red, Amber, Green
• Risk categorization
• Risk assessment

Red, • Rag status is a method that divides risk into three

groups. The criteria for each group will normally
depends on the quality and time impact as well as
amber, the likelihood of occurrence.
• Red risk are one that will have the biggest impact
green and green will have on or very low impact.
 • It help in dealing with risk more
risk manageable. Grouping risk by
categorization different categories.

• It can be used to narrow down

the risk identification in the RAG
Risk urgency status. This technique focused on
assessment timing element of risk. Priority is
given to the most imminent risk.
 After the quantitative and qualitative analysis
has been done, then its need to put together
suitable response to address the risk.
• Avoidance
• Mitigation
• Transference
• Acceptance
 AVOIDANCE • In this the circumstance around the risk
has been changed, so the risk is no
OR REMOVAL longer exists.

• It is also known as risk reduction. This

Mitigation action is taken to lessen the chance or
impact of risk.

• It is the shifting the impact to a third

Transference party.

• It is the contingency plan to deal with

Acceptance the impact or the acceptance of risk
involves drawing up a plan B .
5. Monitoring
Keeping a watchful eye on the risk management plan
will ensure that nothing slips through the crack.
• Status meeting
• Risk audit

Status • It should be used to report the progress of risk

management. Frequently status meeting
ensure that risk are at forefront of peoples
meeting mind.

• Audits need to be done to evaluate how effective

Risk the response to risk have been. Audits can also be
used to assess the risk management process.
• The format , objective and findings of a risk audits
audits need to be clearly documented to improve the risk
management process.
THANKYOU