Risk Management Paper

Risk Management Paper

Ashley Adams

University of Phoenix

AJS/564: Management Of Institutional Risk And Critical Incident Management

December 24, 2018

Carlos Zuniga

Risk Management Paper

Risk management is the process of identifying vulnerabilities and threats to resources and information that is used by a company. This information and resources could be valuable to a company by helping them to reach business objectives. A company must have a risk management plan in place in order to protect assets and personnel. Companies have to decide what measures to take in reducing risk to an acceptable level. The objective of performing risk management is to enable the company to accomplish its mission by better securing the security systems that store, process, or transmit company information; management should be trained on how to make well-informed risk management decisions to justify the expenditures that are part of the security budget. This paper will address: Why risk is important?, How justice and security organizations plan for and manage risk. Explain civil liability and how it relates to organizational risk. Costs associated in managing risk. Consequences of failing to manage risk and lastly, the benefits of a properly performed risk analysis has for management and key stakeholders.

What is Risk? Risk is the uncertainty of financial loss, resources and results of the probability that a loss has or will occur (Wolke, T., 2017). A company should perform a risk analysis, which is a tool that helps management to determine what would be considered a risk and what to do in order to prevent the possibilities. Risk can be expressed as a hazard with the probability of a specified outcome. Risk is the possibility of incurring loss or misfortune (Wolke, T., 2017). Effective risk management strategies allow a company to identify a project’s strengths, weaknesses, opportunities and threats. By planning for unexpected events, a company can be ready to respond if anything arise (Wolke, T., 2017). To ensure that a project is successful, this would be defined on how personnel handle potential risks. Personnel has to identify, mitigate or avoid problems when they are brought to one's attention. Success within a company recognizes that risk management is important, because achieving a project’s goals depends on planning, preparation, results and evaluation that contribute to achieving strategic goals. Risk management plans help for any project to be successful by establishing a list of internal and external risks. The plan must identify risks, probability of occurrence, potential impact and proposed actions for the events that might happen. Events that are considered low risk events have little or no impact on cost, schedule or performance. Moderate risk causes some increase in cost, disruption of schedule or degradation of performance (Wolke, T., 2017). Events that are high risk are likely to cause a significant increase in the budget, disruption of the schedule or performance problems.

Identifying the sources of risk provides personnel with the understanding of the circumstances that might impact the ability of a project meeting the objectives. Identifying the risks starts before the initiation of the projects and the risks are continued to be identified throughout the process of project. When the risk is identified, personnel have to assess the probability of its occurrence, the level of impact it will have on numerous factors such as the cost, schedule, etc. of the project (Wolke, T., 2017). Personnel then have to prioritize accordingly. Personnel has to make sure that they pay attention. Missing details to risks happening can have more serious consequences than expected. In a risk management plan, personnel must devise mitigation steps or a contingency plan. Even the most carefully planned project can run into trouble. No matter how well you plan, your project can always encounter unexpected problems. When planning, it is important to avoid the risk (Wolke, T., 2017). If it can be prevented from happening, it definitely won’t hurt the company. The easiest way to avoid risk is to walk away from it, but that may not be an option when carrying out the project. If the risk can’t be avoided, the personnel can mitigate it. This means that employees can take some sort of action that will cause the risk to do as little damage to the company as possible. Another effective way to deal with risk is to pay someone else to accept it. The most common way to do this is to buy insurance.

Commercial general liability is property insurance, and accounts receivable insurance (Banks, E., 2004). This insurance can be one of the most important coverages, but unfortunately it is also one of the most difficult and expensive to obtain. The policies cover operators for liability if an accident occurs, including bodily injury, medical payments, and personal injury. Property insurance provides coverage for the financial risks associated with loss of assets such as buildings, equipment, and merchandise (Banks, E., 2004). Accounts receivable insurance normally covers accounts receivable if a customer fails to pay due to default. Insurance does not prevent accidents from happening. It does, however, provide a reasonable amount of financial protection if an accident does occur (Banks, E., 2004).

Cost of risk is the cost of managing risk and the losses that might have happened due to risk (Wolke, T., 2017). It is a metric that can be calculated for a financial period or also a forecast for a future period. The common elements of cost of risk is: administrative costs, this is the costs of managing risk such as the budget of a risk management team. Mitigation Costs is reducing risk. For example, a company that buys specialized hardware and software to reduce information security risks. Risk control costs is the cost of operational processes designed to reduce risk such as credit checks that are run on customers