Question

How does management decide on the appropriate risk management capabilities?

Answer 1

Management arrives on the appropriate risk management capabilities through undertaking risk analysis for a particular project, area or field of organization. In order to predict the best Risk management capabilities required to manage the risks well so that they don't not act as complexities , managers usually perform risk assessment which helps them to categorise the risks into critical, serious or average and also helps them to understand the nature of risk to identify risk management capabilities necessary to formulate effective strategies, tactics which wil help in mitigating them. The appropriate risk management capabilities intend to reduce the impact or consequences of risk by employing resources, maintaining efficient provisions and creating an environment which will help dealing with it in the best possible manner to ensure that these risks do not hamper the smooth functioning and do not interrupt the task accomplishments.

The major risk management capabilities which usually management considers essential to cope up with the risks , threats and changes entail :

Timely identification of risks and timely response to address them.

Adaptability and flexibility towards changes taking place.

Ability to identify, analyse and quantify the risks at early stage.

Necessary infrastructure, facilities and resources required to mitigate it .

Problem solving attitude towards risks and ability to view them as opportunities.

Working under pressure and short deadlines.

Financial acumen to perform technical risk assessment.

.

These capabilities work almost in every risk environment, However there are specific requirements to specific situations which the management takes into consideration while deciding which risk management capabilities are essential for the organization such as nature of risk, tendency of risk to affect work procedures, degree of severity, consequences and impact, which also helps them to find solutions to them.

.

.

Thanks dear student.. Hope this helps... Good luck.. Please rate if satisfied :)