Risk Management Explained
Before the discussion of risk management, we need to understand what is “at risk”? A risk is “uncertainty about the outcome.” If you perform an action, and the probability that the outcome is uncertain, as it is called risk. There are risks involved in the various measures taken. Starting a business is a risk to buying a home is a risk. The issue of risk management, risk management of financial institutions have diversified software for all subjects to be. What is not practiced as a general risk management is explained below.
1. Identification of the risk
2. Work on the probability of risk
3. determine the impact of a risk occurring
4. Finding ways to reduce risks
5. reduce the likelihood of a risk.
Before starting any business, all kinds of risks that arise and can vote in reality have been identified. A simple example, if you cross a street, you are exposed to the risk of being hit by a car. If it’s a busy street with heavy traffic, the likelihood of this happening are even greater.
Now, when a car hits him, it’s the least that can happen to you, you can help minor cuts and bruises. The worst thing that would kill him. Now you can if you know what the consequences of taking risks, you will find a way to reduce risk. How is that? In this case you are looking for the next crossing for pedestrians and use them. In this way, you cross to reduce the risk factor involved in a busy street.
Risk management in each project follows the same principles. If a credit card company that issues a credit card for the first time conducted a review of credibility. Check if you pay in terms of their accounts. Based on your income and expenses must receive a credit card. If you feel you have an increased risk of ceiling for the credit limit.
Insurance is a risk when you sell insurance. For example, an insurance company offers general insurance. They have several sales agents to sell insurance. Well, if your insurance finds out that eighty percent of the stores and offices in a building made available to them. Immediately “dispersed” to the risk. How they do it is to subscribe to the promotion of business, a portion of insurance coverage. If the building is on fire, the insurance company and the insurers would have to bear the loss. In the event that insurance does not diversify risk, have full insurance and the company is likely to retreat in this case to pay.
Similarly, a bank is in danger if all his capital in a company. If the business fails, the bank will collapse. In real estate, stocks and other companies, risk management plays an important role.
In the factories and workplaces of the risk management team to assess the probability of occurrence of disasters. Then choose ways the possibility that this may happen to be reduced. Protective clothing for workers and security is a means of risk management.
The essence of risk management is to try to experience the possibilities that a tragedy will be reduced. Identify potential risks and possibilities of its occurrence. There are contingencies that may occur and are usually neglected, when the management of risks. Like an earthquake in a region that has a history of earthquakes and not on a fault line. This risk would not be left in the hands of risk management.