Question
In: Operations Management
How can the company decide for risk management techniques?
How can the company decide for risk management techniques?
Solutions
Expert Solution
The company decides for risk management techniques in the following manner:
1. after analyzing the risks and its potential outcome, if the company has the capability of ignoring the activity that carries risk, Avoiding risk technique can be used. But in this technique, if the company avoids the overall activities, it might have to avoid the opportunities in the first place to secure the future.
2. The company can choose reducing technique of the risk management if it still wants to grab the little opportunity out of risks and have resources to make it work. For this technique, the effects of risks must be studied carefully by the company.
3. When there is some risk that the company does not want to bear or let go of, in such a case, sharing techniques can be helpful. In this technique, the company can work as usual but share the risk with other entities like an insurance company or outsourcing company.
4. If the loss or gain is not big and there is no harm in taking a chance, the company can choose the retention of risk technique.
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