Roles of Risk Management Functions

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ROLES OF RISK MANAGEMENT FUNCTIONS IN BUSINESS ORGANISATION TABLE OF CONTENTS Title Page Introduction 4 1. Purpose of risk management 5 a. Types of risk 6 b. Certain steps to overcome risk 7 2. Benefits of risk management 8 3. Risk management components 9-10 Bibliography11 INTRODUCTION

  • Risk management means certain set of rules and regulation and procedures which helps and organization to overcome the unexpected danger or risk to the organization and the rules will help the entity to respond the threat in an appropriate manner so that the risk will dissipate.

THE TASK

  1. Examine and discuss each step below which forms part of the risk management process followed within an enterprise. Explain the reasons behind each step, what each step achieves for the enterprise and give examples.
  • Determine the objectives of the organisation – throughout the world every entity has only one target or aim and that is PROFIT. So, to achieve and gain the profit every organization has developed and formed certain sets of goals and objectives. These kinds of goals and objectives will keep the business on the floating boat of success. We can use number of different methods and approaches to define corporate goals and objectives, using formal and informal procedures. Doing this can provide the organization with a definition of its goals and objectives that represent its current thinking. These goals and objectives can then be integrated into the decision-making process so that decisions made with the decision model are structured to impact all levels of the organization and are quantifiable and defensible. Following are the aspect which can help to pre-set of goals and objectives:
  • Improve contract performance.
  • Minimize operating costs.
  • Improve customer management.
  • Minimize production costs.
  • Maximize customer service.
  • Minimize shipping costs.
  • Advanced information technology.
  • Increase sales.
  • Improve profitability.
  • Identify exposures to loss – this means that how to identify the reason of loss and what are ways of loss. So, in order to identify it there are several ways to from which the most common and widely used ways are as follows:
  • Company should need to analyse the past losses that was occurred and should also know the reasons.
  • Must analyse the reports and data to observe the minor damages that was not included in the loss claim reports, to improve the loss exposure in the future.
  • Entity must conduct a survey of each and every department or operating units to observe where potential loss can occur and these surveys must be done professionally. Once the survey has been completed, each risk can be ranked Low, Medium or High and appropriate strategies can be used to address each one. Follow is the risk assessment chart:
High Frequency Low Frequency
High Severity High Risk High Medium Risk
Low Severity Medium Risk Low Risk
  • By the inspection of working site can also be used to measure the loss of exposure e.g.

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