Exprescion, Kharl James M.

Assignment 4

1. What are the steps in the pure risk management process?

- The risk management process is a critical step in project management. It helps identify
potential risks and devise a plan to address them before they cause any serious issues and
eventual project failure. This process typically involves risk identification, assessment,
response, monitoring, and reporting.

2. Imagine that the step of evaluation of the risks did not account for related risks. What
would be the result for the risk manager?

- If the evaluation of the risks does not account for related risks, the risk manager will be able
to minimize specific risks only, which would mostly include pure risks.

3. In the allocation of costs, does the CRO need to understand the holistic risk map of the
whole company? Explain your answer with an example.

- Yes, the CRO needs to understand the holistic risk map of the whole company. All risks in a
company interact and affect one another. To identify and evaluate all risks in a company, the
CRO needs to understand the holistic risk map of the whole company. For example, the
reputation (business risk) of an organization is dependent on many factors which may include
the sales team (operational risk), customer service(operational risk), product quality (business
risk), etc.

4. Design a brief risk management policy statement for a small child-care company.
Remember to include the most important objectives.

Document Sources of Risk The first step in your risk management plan is to document all
potential sources of risk that apply to your child care center. Use your imagination and start
making a list of all the unexpected events that could happen which would pose a risk to your
business. Make your list as complete as possible, but remember to add more potential risks
over time as they come to mind.

Evaluate the Probability and Impact of Each Risk For each item in your list, you’ll want to
think about the probability or likelihood of the risk and the impact it would have on your
business. You may want to record the probability as a percentage and rate the potential impact
of the event on a 10-point scale.

Doing this will help you understand which risks pose the greatest danger to your child care
business. As a result, you’ll be able to create a risk mitigation plan that addresses the most
probable and impactful sources of risk.

Determine Which Risks May Be Avoided Now that you’ve identified major sources of risk
and determined which risks pose the greatest threat, it’s time to start managing those risks!

The first step is to identify any risks that you can completely avoid by implementing training,
processes or technology within your business. For every such risk, you’ll want to document
the exact steps that you will take to avoid the risk.
 Transfer Risk Where Possible Once you’ve dealt with risks that are avoidable, the next step
is to address sources of risk that can be transferred to someone else.

There are two general ways you can think about doing this: Purchasing Insurance –
Purchasing insurance that shields you from liability for certain risks. Liability Waivers –
Having parents sign a liability waiver that shields you and your business from liability for
certain risks.

Establish Mitigation/Prevention Plans for Unavoidable Risks If a risk can’t be avoided or

transferred to another party, you may want to establish a risk mitigation plan. The goal of risk
mitigation is to reduce both the likelihood and the impact of a risk to your child care business.

Your risk mitigation plan should describe the steps you will take to reduce the likelihood
and/or the impact of a risk to your center.

Establish Risk Response Protocols As a final step, your center should establish risk response
protocols for any sources of risk that can’t be avoided or transferred as part of your risk
management plan. The protocol should detail how your center will respond to certain types of
risk to minimize their impact on your business, staff members, and the children in your care.

Risk Management for Child Care Centers Example

Before we wrap up, we wanted to leave you with a quick example of what your risk
management plan might look like.

This short table includes three examples of potential risks, evaluations of their likelihood and
impact, risk management strategy (avoid, transfer or mitigate), and specific action steps for
managing each type of risk.

5. For the same child-care company, create a risk identification list and plot the risks on a risk
map.

Annual Risk
Impac
Risk Description Probabilit Managemen Action Steps
t
y t Strategy

The center is
liable and Purchasing business
could be liability insurance
Premise
sued for any will transfer this
s
accidental liability to the
Liability 5% 10/10 Transfer
injury that insurance company
Exposur
occurs to a and reduce the
e
parent or impact of this risk to
child on the a 1/10.
premises.

Staff The center’s This risk can be

Hiring compliance 25% 7/10 Avoidance avoided by
Risk status and consistently
 reputation following a hiring
could be process that
damaged if a includes background
staff member checks, reference
is hired checks, and
without the verification of
appropriate credentials/educatio
education, n. Performing these
experience, actions can reduce
qualification the impact of this
s, risk to a 1/10.
certifications
and
background
checks.

This risk can be

mitigated by
training employees
The center on the consequences
could lose of theft and
Fraud money if an performing regular
20% 3/10 Mitigation
Risk employee financial and
steals from inventory audits to
the business. check for missing
goods or money.
This would reduce
risk to a 1/10.