Custom essays on Risk Management

Due to the factors of risks, they can be divided into two groups:
Political risks – these are risks arising from political developments affecting the business (closure of borders, a ban on the export of goods, military operations in the country, etc.).
Economic (business) risks – are the risks arising from adverse changes in the economy of the enterprise or the economy. The most common type of economic risk, which are concentrated private risks are changes in market conditions, unbalanced liquidity (inability to timely fulfill liabilities), changes in management, etc.
By the nature risks are divided into:
The external risks – they include risks that are not directly related to the activities of the enterprise or the contact group (social groups, legal entities and (or) individuals who show potential and (or) a real interest in a particular company). At the level of external risk affects a very large number of factors – political, economic, demographic, social, geographical, etc.
The internal risks include risks associated with the activities of the enterprise itself and its audience contact. At their level of economic activity affects the company’s management, the choice of optimal marketing strategy, policies and tactics and other factors: the productive capacity, technical equipment, the level of specialization, productivity and safety.
By the nature of accounting risks are divided into:
The external risks include risks that are not directly related to the activities of the enterprise or the contact group (social groups, legal entities and (or) individuals who show potential and (or) a real interest in a particular company). At the level of external risk affects a very large number of factors – political, economic, demographic, social, geographical, etc.
The internal risks include risks associated with the activities of the enterprise itself and its audience contact. At their level of economic activity affects the company’s management, the choice of optimal marketing strategy, policies and tactics and other factors: the productive capacity, technical equipment, the level of specialization, productivity and safety.
Risks classification according to the field of emergence usually include: industrial, commercial, financial and insurance risks. (International Organization for Standardization, 2009)
Production risk arises from the failure of their business plans and commitments for products, goods, services and other productive activities as a result of adverse environmental impacts, and the inadequate use of new technologies, fixed and circulating capital, raw materials, labor time. Among the most important causes of occupational hazards include: the reduction in anticipated production volumes, rising material and / or other expenses, payment of increased royalties and taxes, low discipline of supply, loss of or damage to equipment, etc.
Commercial risk – the risk that arises in the process of selling goods and services produced or purchased by an entrepreneur. Due to commercial risks are: reduced sales due to changes in market conditions or other circumstances, increase the purchase price of goods, goods lost in the process of circulation, increasing distribution costs, etc. (Young, 2000)
Financial risk relates to the possibility of failure by their financial obligations. The main causes of the financial risk are: the depreciation of investment and financial portfolio due to currency fluctuations, failure to make payments.
Insurance risk – the risk that the offensive under the terms of insurance events, resulting in the insurer must pay the insurance compensation (the sum insured). The result of risk are losses caused by inefficient insurance business as a pre-conclusion of the insurance contract, and at later stages – reinsurance, the formation of insurance reserves, etc. The main causes of the insurance risk are: correct certain insurance rates, gambling methodology of the insured.
It is important to mention, that different risks need different approaches in their management, and require different actions of managers while handling them. For the enterprise it is equally important to manage the political, financial technology, insurance risks, to control actions in emergency situations, environmental protection, etc.
2. The essence of the risk management process
Risk management must be integrated into the whole organizational process, must have its own strategy, tactics, operational implementation. It is noted that it is important not only to manage the risk, but periodically review the activities and means of such control.
The high efficiency of resources, when running the program of risk management, can be achieved only through a systemic approach. This approach to risk management is the most common.
Risk management has become topical after the discovery of the risk problem. This should be used in the analysis and modeling risk.
Risk Management – a process associated with the identification, risk analysis and decision-making, which include maximizing the positive and minimizing the adverse effects of the onset of risk events. (Hopkin, 2010)
The process of project risk management typically includes the following procedures:
1. Risk Management Planning – the choice of approaches and planning for risk management project.
2. Identification of risks – identification of risks that could affect the project and documenting their characteristics.
3. Qualitative risk assessment – a qualitative analysis of risks and conditions of their occurrence in order to determine their impact on the success of the project.
4. Quantitative evaluation – a quantitative analysis of likelihood and impact of the effects of risks on the project.
5. Plan your risk response, definition of procedures and methods to reduce adverse effects of risk events and the use of the potential benefits.
6. Monitoring and control of risks – risk monitoring, identification of the remaining risks, the implementation plan for project risk management and assessment of the effectiveness of actions to minimize risks.
All these procedures interact with each other, as well as with other procedures. Each procedure is performed at least once in every project. Despite the fact that we consider here presented as discrete elements with well-defined characteristics, in practice they may overlap and interact.
We must in risk management use an integrated approach, in which the means and methods are shared across the enterprise, and in the management of the company is well thought out strategy. Integrated approach – is an active position, as implied foreknowledge, and not a passive reaction to risk, this approach provides more opportunities and limit risk. (Hopkin, 2010)
The functions of the system of risk management, that explain the content of the management process, include the following operations:
– policy-making in risk management;
– analysis of the risk situation, that is identification of risk factors and evaluation of its potential level, predicting the behavior of economic agents in this situation;
– development of alternative solutions and selecting the most appropriate and lawful of them;
– definition of available ways and means to minimize risk;
– plan for the neutralization, compensate for anticipated adverse effects of risk.