Risk management is one of the most important parts of any business activity. Risk management is the assessment of risks related to a product, managerial decision, or any other company policy. It is an important aspect as it familiarizes the faculty with probable risks and also helps put up a backup plan in case of failure and worst case scenario conditions. Risks can be incurred from instability in various fields like finance, marketing, credit, legal issues and also from natural disasters, accidents attack from competitor or adversary etc. Risk management involves avoiding the activities that will lead to a risk or threatening condition and if a threat does occur then having a mechanism in place to deal with it.
Risk management is a simple process if done in a proper manner. It usually comes into play after the development phase of a project or before designing of a new project. There are a few simple pointers one must remember to put up a risk management plan. First of all identify the areas where risk can occur. Then identify the risk. Determine what losses will occur if risk does actually take place. Formulate a plan to ensure that all the processes and activities in the company are carried out in such a way that minimum risk is involved. But sometimes you cannot ensure that risk will not occur like in case of human error or natural disasters. For such cases formulate a risk detection and recovery plan. For new products consider product liabilities and risks involved with the product.
Though no matter how much planning is done only experience can help avoid risks. So regular meetings and discussions must be carried out for up-gradation and re-fabrication of risk management plan. For financial risk management the market should be studied regularly and proper investments and research should be done. Whenever making a decision on company policy or launching a new product all legal liabilities must be considered. It is a must to take human error into consideration. Human error cannot be predicted and hence risk assessment in such cases becomes difficult. But still every possible error should be considered as far as possible and a plan for risk management and recovery must be formulated. This can involve easy undo options or double check mechanism for critical process, auto save on unexpected shutdown etc.
One of the major risk conditions occurs during a natural disaster. Though they don’t occur that often they are the most dangerous in terms of risk for any organization. A company has loads and loads of date stored in databases of different types. This data contains important information like customer records, employee records, sales information, product information, management policies etc. A natural disaster like earthquake, volcano eruption or tornado can destroy these databases and make the company lose all its vital and sensitive information gathered from years of research. To avoid this strong and effective risk management plans for natural calamities must be formulated. Such a risk management plan involves making of duplicate databases with all sensitive information and storing them as backups in some other safe location. Also in case of failure of system these databases can be used to continue operation of critical processes.
Risk management is of great importance in any company policy and must be strongly implemented to ensure optimized working of the organization.