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    Risk Management Principles

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    mostafa
    The document discusses risk management principles and processes. It defines risk management and outlines the key steps as identifying, assessing, and prioritizing risks followed by coordinating measures to minimize risks. It also lists principles of risk management according to ISO including that risk management should create value and be part of decision making.

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    Risk Management Principles

    Uploaded by

    mostafa
    13 views2 pages
    The document discusses risk management principles and processes. It defines risk management and outlines the key steps as identifying, assessing, and prioritizing risks followed by coordinating measures to minimize risks. It also lists principles of risk management according to ISO including that risk management should create value and be part of decision making.

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    The document discusses risk management principles and processes. It defines risk management and outlines the key steps as identifying, assessing, and prioritizing risks followed by coordinating measures to minimize risks. It also lists principles of risk management according to ISO including that risk management should create value and be part of decision making.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    13 views2 pages

    Risk Management Principles

    Uploaded by

    mostafa
    The document discusses risk management principles and processes. It defines risk management and outlines the key steps as identifying, assessing, and prioritizing risks followed by coordinating measures to minimize risks. It also lists principles of risk management according to ISO including that risk management should create value and be part of decision making.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
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    Risk Management Principles Simple & Precise Explanation

    Risk management as understood by its name is process of managing the


    risks, that involves first identify, assess and prioritize the risks and then
    implement the coordinated measures and/or resources to eliminate,
    minimize and monitor the probability and impact of the unwanted
    events or situations.
    Risk management is the identification, evaluation, and prioritization of
    risks (defined in ISO 31000 as the effect of uncertainty on objectives)
    followed by coordinated and economical application of resources to
    minimize, monitor, and control the probability or impact of unfortunate
    events or to maximize the realization of opportunities.
    The risk that we need to manage can be of any type i.e. credit risk,
    uncertainty in financial markets, project failure at any stage of the
    project, natural disaster, IT infrastructure failure, bankruptcy of
    creditors, hacking of servers and an accident or attack from enemies
    etc.
    Organizations adopt various approaches for managing the risks some
    may prefer to transfer the risk to other parties i.e. through insurance of
    plants and machinery and even complete projects (although there is still
    risk of bankruptcy of insurer).
    Some may decide to avoid it by altering the processes and or by
    denying the orders from a fragile client.
    Also some organizations manage the creditors’ risks by increasing their
    profit margins etc. Risk sharing is another approach in which you share
    the benefit of gain or burden of loss from a risk and from measures
    taken to mitigate the risk.
    There are some strategies to manage threats (uncertainties with negative
    consequences) which typically include avoiding the threat, reducing the
    negative effect or probability of the threat, transferring all or part of the
    threat to another party, and even retaining some or all of the potential or
    actual consequences of a particular threat, and the opposites for
    opportunities (uncertain future states with benefits).
    There are several risk management standards available globally and that
    consider varying aspects of the risk management depending upon the
    target business areas i.e. engineering, project management and IT etc.
    Certain risk management standards have been criticized for having no
    measurable improvement on risk, whereas the confidence in estimates
    and decisions seems to increase. For example, one study found that one
    in six IT projects were “black swans” with gigantic overruns (cost
    overruns averaged 200%, and schedule overruns 70%).
    There are risk management standards by PMI, NIST and ISO.
    Risk Management Principles
    The International Organization for Standardization (ISO) identifies the
    following principles of risk management:
    Risk management should:
     Create value – resources expended to mitigate risk should be less
    than the consequence of inaction
     Be an integral part of organizational processes
     Be part of decision making process
     Explicitly address uncertainty and assumptions
     Be a systematic and structured process
     Be based on the best available information
     Be tailorable
     Take human factors into account
     Be transparent and inclusive
     To be dynamic, iterative and responsive to change
     Be capable of continual improvement and enhancement
     Be continually or periodically re-assessed
    Risk management methods are adopted mostly in the following
    sequence:
    1. To identify, characterize, and assess the potential threats to
    company assets or operations
    2. To assess the vulnerability of critical assets and processes to
    specific threats
    3. To determine the risk through risk assessment approach
    4. Identify the practical ways to reduce the risks
    5. Prioritize risk reduction measures based on a business strategy

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