Major Strategies behind Implementing Risk Management Programs

Introduction

A risk is the likelihood of the occurrence of something that brings about a loss. Loses can be either direct or indirect depending on the situation. For example, such risks as earthquakes cause a direct loss of buildings. On the other hand, indirect losses include losing customer confidence or reputation, and increased operation costs in the process of recovering. Due to the advancement in technology, risk levels have risen. Therefore, there has been a need to put in place strategies that will be aimed at reducing risks facing an organization. The latter depend on several factors such as the size of a company and the complexity of business procedures. This paper examines various strategies that an organization can use in implementing risk management programs.

Risk Management

Risk management seeks to reduce, eliminate and control risks with an aim of enhancing advantages and avoiding detrimental effects of provisional exposure. Risk management aims at maximizing the possibility of success and reducing the probability of potential losses. It also involves the process of identifying, monitoring, measuring and controlling risks (Alhawari, Karadsheh, Talet, & Mansour, 2012). The process of assessing risks includes identifying, evaluating the impact and recommending reduction measures; risk mitigation entails prioritizing, implementing, and maintaining appropriate risk control (Shenkir & Walker, 2007). The major steps of risk management include identifying, establishing, analyzing, developing risk alleviation programs, monitoring and reviewing risk management strategies. The major approaches to the implementation of risk management programs in the field of technology include the following.

Communication and Consultation

The aim of communication and consultation is to identify people who should be involved in the process of assessing  risks including the identification, evaluation, and analysis of people who will be involved in reviewing and monitoring risks (Shenkir & Walker, 2007). Such persons should have understanding of the decision-making process and the reason why certain actions are required when tackling risk issues (Alhawari et al., 2012). It is also important to use modern technology in this process.

Establishing the Context

Through the process of identifying the context, a company will define parameters that will be taken into consideration when running and setting the extent and risks criteria in a certain process. Establishing the context should be considered deeply to determine how it is associated with the scope of a given risk management program and the technology that may be required in the process. There are some steps, within which a threat should be recognized, and they include the outside context and the environment where a company seeks to achieve its main objectives. The inner context involves the domestic environment where a firm seeks to achieve its aims. The risk management context defines the scope, objectives and parameters of an organization where risk management strategies are applied. The development of risk evaluation criteria mainly aims at evaluating the importance of risks and defining their acceptable levels for a given activity (Shenkir & Walker, 2007). The last step is the definition of the structure of risk analysis, which entails determining those categories of risks that can be managed.

Risks Identification

Risk recognition is the fundamental step in the process of threat management. It determines and reveals possible risks that have a high probability of occurring. In this process, various risks are investigated by considering the activities of organizations and all directions and attempts that may cause exposure to risks in the future from the varying external and inner environment. Accurate technology equipment may be used in risk identification.

Risk Analysis

Risk analysis aims at assessing the impact of exposure and the likelihood of particular outcomes. The impact of risk exposure should be considered under the elements of quality, benefit, time and resources (Shenkir & Walker, 2007). Risk analysis determines the possibility and the consequences of any negative impacts and then estimates the actual level of risks by combining the probability and the outcomes. The risk management team should use the modern technology in carrying out a risk analysis.

Risk Evaluation

Before one determines the likelihood, it is imperative to consider the risk tolerance level of the organization. The latter should consider the risk appetite and determine acceptable and unacceptable risks. The former levels of risk depend on the degree of voluntaries (Shenkir & Walker, 2007). The process of risk assessment gives enough material for decision-making.

Risk Treatment

The process of risk treatment entails selecting and implementing several options for treating various risks. In addition, it should provide such options for risk treatment as changing the consequences, avoiding risks, changing the likelihood of occurrence, as well as sharing and retaining risks (Alhawari et al., 2012).

Monitoring and Review

The process of monitoring and reviewing is a necessary and integral part in the risk supervision process. Risks need to be monitored to ensure that the changing environment does not influence risk priorities and ensure that the process of risk management is effective in both operation and design (Radack, 2009). The organization should ensure that it reviews the process of monitoring at least on an annual basis. For the above to work it is imperative for a company to understand the process of organizing risk management (Alhawari et al., 2012). In the process of monitoring, modern technology can also be applied.