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  • Em Risk MNGMNT

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    Shiela Mae Dapoc
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    Risk management involves organizing strategies to protect assets and people from pure risks that could lead to losses. There are four main methods for dealing with risk: risk avoidance, risk retention, risk reduction, and risk shifting. Risk reduction involves instituting measures to lower the hazards of potential losses, such as physically separating buildings to reduce fire risks or maintaining duplicate records to lower accounts receivable losses. The purpose of risk management is to intelligently choose from available risk handling methods to ensure a firm's economic survival.

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    Risk Management

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    Em Risk Mngmnt

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    Risk management involves organizing strategies to protect assets and people from pure risks that could lead to losses. There are four main methods for dealing with risk: risk avoidance, risk retention, risk reduction, and risk shifting. Risk reduction involves instituting measures to lower the hazards of potential losses, such as physically separating buildings to reduce fire risks or maintaining duplicate records to lower accounts receivable losses. The purpose of risk management is to intelligently choose from available risk handling methods to ensure a firm's economic survival.

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    4 views9 pages

    Em Risk MNGMNT

    Uploaded by

    Shiela Mae Dapoc
    Risk management involves organizing strategies to protect assets and people from pure risks that could lead to losses. There are four main methods for dealing with risk: risk avoidance, risk retention, risk reduction, and risk shifting. Risk reduction involves instituting measures to lower the hazards of potential losses, such as physically separating buildings to reduce fire risks or maintaining duplicate records to lower accounts receivable losses. The purpose of risk management is to intelligently choose from available risk handling methods to ensure a firm's economic survival.

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    of 9

    RISK

    Shiela Mae S. Dapoc


    TYPE OF RISK
    • Pure Risk
    - the one in which “there is only a chance of loss”.

    - this means that there is no way of making gains with pure risks.
    -Are insurable and may be covered by insurance.
    • Speculative Risk
    - the one in which there is a chance of either loss or gain.

    -this type of risk is not insurable.


    WHAT IS
    RISK
    MANAGEMENT?
    RISK MANAGEMENT
    - is an organized strategy for protecting and conserving assets and people.

    - is designed to deal with pure risks, while the application of sound


    management practices are directed towards speculative risks that are inherent
    and cannot be avoided.

    What is the purpose of risk management?


    To choose intelligently from among all the available methods of dealing with
    risk in order to secure the economic

    survival of the firm.


    The risk may
    be avoided

    The risk may The risk may


    be shifted be retained

    METHODS
    OF DEALING
    WITH RISK
    The hazard
    The loss may
    may be
    be reduced
    reduced
    Risk retention is a method of handling risk wherein the
    management assume the risk. A planned risk retention, also called
    self insurance, is a conscious and deliberate assumption of a
    recognized risk.

    Hazards may be reduced by simply instituting appropriate


    measures in a variety of business activities.
    EXAMPLES OF EFFORTS ON LOSS
    REDUCTION
    1. Physically separating buildings to minimize losses in case of fire.

    2. Using fireproof materials on interior building construction.

    3. Storing inventory in several locations to minimize losses in cases of fire and theft.

    4. Maintaining duplicate records to reduce accounts receivable losses.

    5. Transporting goods in separate vehicles instead of concentrating high values in


    single shipments;

    6. Prohibiting key employees from travelling together, and

    7. Limiting legal liability by forming several separate corporations.


    Another method of handling risk is by shifting it to another party.
    Examples of risk shifting are hedging, subcontracting , incorporation and
    insurances.
    Hedging refer to making commitments on both sides of a
    transaction so the risks offset each other.
    THANK YOU!

    ~감사합니다!~

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