Key elements of Risk Management

Risk Management is very important because it gives your business the information about the implementation of the plan and its efficiency. By monitoring, evaluating, and measuring the risks, businesses are able to get a better understanding of their strategy that will help them to choose the right course of action that fits their company goals.

Each company faces risks in the process of project implementation. They usually treated differently: someone tries not to notice them, someone avoids them, but only a few know how to systematically and consciously manage them.

Risk management is a decision-making tool needed for evaluation, identification, and determining risks aimed at minimizing the possible losses of the project caused by its implementation. Risk management process should begin with the understanding that:

1. any profit is accompanied by risk;
2. the higher the risk level in this market segment, the higher is the rate of return;
3. due to the presence of risks, you can take your place in the market;
4. risks are allies of one who knows how to manage them.

The risk management process consists of the following steps:

• Risk identification;
• Risk assessment;
• Defining a risk response strategy;
• Regular change tracking.

TYPES OF RISKS

Each company can be exposed to the following risks:

• risk of falling sales;
• risk of uncontrolled cost increases;
• risk of inability to sort out debts (credit risk);
• organizational risks (risks associated with mistakes in the management of the company and its employees; problems of the internal control system, poorly developed work rules, risks associated with the internal organization of the company);
• technical and production risks (risks of fires, accidents due to improper organization of the production process; possible losses due to failures and breakdowns of equipment, etc.);
• legal risks (may arise due to inconsistency of internal documents, concluded company agreements with applicable laws and requirements).

THERE ARE SEVERAL KEY STAGES IN RISK MANAGEMENT:

You can find them in the next document:

Download PDF with Risk Management Key Stages and Elements

Don’t miss the article about preparing a contingency plan during and after the quarantine.

You can always ask UppLabs about IT consulting and Digital Transformation services to upgrade your company’s operations.