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Risk management is the process of identifying, analyzing and either accepting or mitigating uncertainties in investment decision-making. It occurs at any time a risk manager in an organization attempts to quantify the potential for losses in a certain investment and then devise an appropriate action to be taken given the organization’s risk tolerant level and their investment objectives. A failure to perform risk management burdens the organization with losses, as well as tarnishing the organization’s name. Various steps constitute the procedure of risk management, including establishing the context, identification of the risk, and assessment of the risk. In the establishment of the context, the risk is identified and a plan on how to solve it devised. A management plan is then designed, and a chart to identify the risk is drawn. In the identification step, common risks are assessed to help in the risk management, and finally at the assessment stage, the managers evaluate the likelihood of occurrence of the risk and the impact it may bring to the organization. Several principles of risk management are given. These principles include review cycle, context of the organization, the involvement of stakeholders, objectives of the organization, giving reports, responsibilities and roles, early warning indicators of the support structure, and supportive culture. The evaluation of risk management involves some steps. These steps are problem analysis, matching the outcomes of risk management plan with its objectives, evaluation of all the activities in the plan to make sure they are effective, evaluate the business environment so as to assess, analyze, and come to a decision about what is required for positive outcomes and elimination of the risk, make the required changes in faulty activities, and finally review the changed activities. Ways by which to treat the risk and various implementation that are conducted by organizations after the study of the risk are discussed. Conclusion In conclusion, risk management is an important activity for any organization. It aids in the identification, prioritization, and assessment of risks. It also enables the coordination and economical application of resources to reduce, control, and monitor the impact and the probability of unfortunate future events or to enlarge the realization of opportunities. Therefore, the main objective of risk management is to assure uncertainties. To avoid or manage risks, various strategies are devised, such as risk avoidance, a reduction of the probability or negative effects of the threat, transfer of part or all of the threat to another party, and even retaining all or some of the actual or potential consequences of a particular threat. Risk management is simply a practice that selects cost-effective ways of reducing the consequences of a certain threat systematically to an organization, and since all risks can hardly be fully mitigated or avoided, organizations have to accept some small amount of residual risks. Risk management also outlines controls that apply to the risks that have been observed. Organizations should be careful while conducting risk management. Giving risk management a priority higher than that of another ongoing task can prevent the organization from starting or even completing various projects that it undertakes. Organizations should be keen not to halt approaching other goals till the risk management process is done. Improper prioritization and assessment lead to time wastage since the organization is misled to deal with risks that might never occur. This also diverts resources that could be used for other demanding projects. To prevent the above limitations, organizations need to develop applicable methods for risk evaluation. The report got after the evaluation is, therefore, taken to the treatment and implementation part of risk management. After this, a risk management plan is created to enable the management of any risk that occurs. If the article was cognitive for you, proceed to read other articles on https://exclusive-paper.com/. Most of the articles are written by Lily Johnson, a professional writer.
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