Question

There are different risk management models used by different businesses. One of these models contains seven key steps. Discuss the first THREE of these steps; providing an example of how each would work in practice.........

Answer 1

The first three steps of risk management model are as follows.

1. ESTABLISHING THE CONTEXT

In this step, the establishment of the context is done. This includes things like planning the remainder of the process. The objectives of the stakeholders are identified on the basis of which the risks are identified and framework is designed. This is important because , once the objectives are identified, we will be able to know that what is favourable and what is not.

2. IDENTIFYING THE RISKS OR THREATS

Risks are those unforseen events that may cause several problems when triggered. So to identify the risks, we have to determine the problems which can be risky. The company should know the environment in which it operates and the different environmental variables which can affect the business prospects .

3. ASSESSMENT OF THE RISK

Once the risks have been identified , the next step is to assess the risk. This involves determining to potential of the risk to cause losses and the extent to which it can affect the goals and objectives. Understanding the nature of tthe risk is done in this step.