Question

There's a 5 step process in risk management. What are they? Comment on them.

Please no handwritten answers.

Answer 1

Risk management is the process where an organization or project identifies, evaluate and prioritizes risks associated with it and the steps that need to be taken to minimize the impact. It plays an important role in any organizations success as it helps them in being ready for any unforeseen situation or risk. There are 5 steps involved in risk management:

- Identifying potential risks: The first step in this process is to identify potential risks. These risks can be categorized such as Health and Hazard risk, Financial risk, and operational risks. These risks can be identified through historic risk occurrence, industry-wide consultation, brainstorming or even with an external search.

- Measuring frequency and severity or Risk analysis: The next step is to analyze the probability of risks occurring and the impact those risks would have. Through this process, we would be able to know the frequency and severity of risks and the kind of resources we would need to spend.

- Examine and evaluate the risks: Now that we have the list of risks that are most likely to interrupt or take place, we can go ahead and rank these risks based on the impact they would have on business or project. Some risks can be neglected and are low impact and then some risks are a high impact in nature and can have substantial consequences if not mitigated or controlled early.

- Risk response planning or treating risks: Once we have risks identified and ranked, we go ahead and choose the best possible solution to mitigate and control the risk. A plan is created and approved which would be followed when a risk takes place.

- Monitoring results: Unlike project, risk management is a continuous process and would have to be monitored to assess the results. We know that organizations objective or environment changes regularly and so does the nature of risk associated with those changes. So it is important to monitor these changes and make necessary changes to the risk management process as and when required.