Life is notable for its instability. No wonder it is believed that the dark stripes are replaced by light ones. Nothing stands still. What is risk? This is a certain condition or event that, if it occurs, can have a negative or positive effect.
The basic concept of risk and its varieties
There are other definitions. This is the probability with which an uncertain event can occur. It turns out that risk is a measurable quantity. There are varieties of businesses that are directly related to managing different types of threats. The size of the income received depends on the effectiveness of their activities. These are investment, insurance companies.
It is important to understand well what risk is to deal with it. There are two types of it:
- The first includes threats that represent some negative impact.
- To the second - opportunities considered as a positive impact on a particular event.
Sequence of necessary actions
Risk management consists of a number of procedures and rules that relate to planning theory. Then they are identified, then analyzed, monitoring is done. For a clear idea of ββwhat a risk is, you should first identify its source, and then determine the sequence of actions. Do not forget about secondary threats. It is also important to identify and analyze them.
In the management process, you must perform the following tasks:
- Develop a management plan. This is a document describing the general concept, classification of risks, different ways of identifying them and response options. It is important to identify all the threats, determine the degree of their influence on the project, and draw up each description in writing. Monitoring and management make it possible to better understand what risk is and what is the nature of its occurrence.
- A qualitative analysis should be carried out - all risks should be prioritized for analysis and processing, assessing and summing up the probability of their occurrence and impact.
- To do a quantitative analysis is a numerical calculation of the impact of all possible threats.
- Prepare a response plan for probable threats - develop a list of actions to reduce them.
Lenders also take risks
Risk is an almost integral part of any commercial activity. This also applies to banks. However, financial institutions prefer to avoid various threats or reduce them to minimum values. Contrary to the opinion of many, the risk of the bank and the level of those benefits that are expected are not associated with any unambiguous dependence.
There are 4 methods to respond to potential threats:
- Evasion.
- Broadcast.
- The decline.
- Adoption.
Evasion is a change in the management plan to remove the threat, to protect the project from possible consequences. Many troubles can be avoided at an early stage of the project by obtaining additional data, as well as after the examination.
Risk transfer - the transfer of negative consequences to the other (third) party, which is given a premium for this.
Risk reduction is the reduction of the consequences and / or probability of a particular event to certain limit values. Special preventive measures are often more effective than eliminating bad consequences.
Risk acceptance occurs when a team does not consciously change its management plan and finds a suitable strategy to respond.
Remember, preventing a risk is easier than correcting its consequences. This applies to any type of activity!