risk management process

risk management process

Enhancing Organizational Resilience: A Comprehensive Guide to Effective Risk Management Process

1. Introduction to Risk Management

The management of an institution has to be able to secure and communicate to stakeholders that the institution has the resilient structures to manage, cope, and adapt to changing circumstances and crisis in the volatile world. The role of management is to take residual risks that neither stakeholders nor the institution would want to bear. Policies to manage risk over a span of time are required. Risk management helps an institution to understand the costs of its activities, the externalities it creates, and the human and environmental trade-offs that come bundled into its decision-making. Whenever the institutional framework does not provide a market mechanism to allow transfer, institution or agency activities come ‘bundled’ with risks (financial, environmental, human safety or life) that are recognized by citizens to provide public value. Institution-specific risks arise from internal structures, capabilities, and vision.

Risk management is a critical component of successful operations in many activities. The management of an organization must be aware of the whole range of issues that could impact its ability to achieve its objectives and, particularly in the public sector, affect major stakeholders. Risk management systems at different levels within an organization should contribute to both strategic management and service delivery objectives by enhancing long-term organizational resilience. Control and risk management systems are two sides of the same coin, and it can be difficult to see how risk management can be fully effective without control. Risk management and the operations of the audit committee, particularly in the public sector, are really about securing as high a quality of performance as possible, including the cost-effective management of risk. However, risk management is a self-contained system that is both broader and narrower than control.

2. Key Concepts and Principles of Risk Management

Other common terms include: Risk management framework: A model that describes an organization’s risk management components (processes, procedures, etc.) and their integration with its governance structure. Risk management process: A series of steps and their related activities that are executed as directed or that take place within the risk management framework across the life cycle of a program.

At the same time, this approach isn’t the only way to manage these impediments and barriers. Most formal definitions describe risk as an event or set of circumstances that, if they occur, will have an effect on the ability to achieve specific objectives. Another variation rests on the concept of uncertainty. This definition may sound simple, but it also recognizes the uncertainties and challenges presented by the future. The corollaries of the concept of these two concepts are risk management, which is the culture, processes, and structures that are directed towards realizing potential opportunities while managing adverse effects.

3. The Risk Identification Phase

3.2 The Risk Management Process Approaches to the structured management of risk have for some time gained ground and are an accepted component of responsible management practice. Multiple frameworks including the ERM of the COSO and the ISO 31000 risk management standard contain descriptions of these risk processes. Also, Quinn and Delbecq, Schermerhorn and Hunt have added greatly to an understanding of these processes. Decisions about what amount of risk to take, where to concentrate risk mitigation effort, and what existing risks may warrant response or action depend on what risks have been previously identified. As noted by Aven, the envisaged tasks ‘prior to moving on to assessment and measurement [of identified risks] need scrutiny and guidance’. Thus, there is a considerable focus in frameworks and in current literature on emphasizing the need to devote special consideration to the selection of risk identification techniques that may be recommended.

3.1 Introduction This chapter provides an overview of the risk identification phase of the risk management process that is necessary for fulfilling an array of organizational goals and improving an organization’s long-term standing. This chapter also provides an account of the contributions to date concerning the theory and practice of risk identification and how these various contributions interrelate to instantiate a coherent risk identification framework. Finally, this chapter identifies several opportunities for future research concerning the identification of sources of risk to organizational goals. According to the recent Committee of Sponsoring Organizations of the Treadway Commission (COSO) Enterprise Risk Management (ERM) Framework, effective risk management starts with an appropriate risk identification.

4. Risk Assessment and Analysis Techniques

An adversary is known to possess the capability in order to create the given threat to personnel, facility, information, and system. There are respective elements that relied on all combined and individual expertise that is held by the adversary and are directed against humans, and these are developed for the statements of interest. Before estimation related to the capabilities might be made and define the request. The capability can also be formed from both the adversary internal resources and external resources. These are the ability of the staff to perform the employer’s research and development regarding specific technologies and an organizational capability.

Risk analysis methods are those that are utilized for the purpose of estimating the potential threat with sources and their opportunities for events as well as that these are even recognized. This involves both analysis and evaluation intersections known as organizational vulnerabilities and dangers as well. The common risk analysis methods that are utilized widely and simultaneously also have their strengths and weaknesses at different specific organizational levels, areas of applications, and the lists of different types of possible threats. These are separated into two components as well as they are performed independently on the threat assessment and an adversary capability estimation. However, threat is known as the number of different strategies to the adversaries and are the major factor that determines the danger. The organization can even be adapted to the capabilities and it only requires less or more so the intentions might be capable completely for preventing the execution of such strategies.

5. Implementing Risk Mitigation Strategies

Aggregated risk scores should be reviewed by senior management and their impact on the strategic planning, risk management process, and resources capabilities. Your risk assessment impacts current operations, creates future opportunities, supports the overall organizational strategy, actions, and directives. The risk managing and mitigation steps are iterative-based reviews that require determining the significance of the risk to the organization in a dynamic and complex environment. By imposing a timeline and controlling the resource allocations and actions will assist the integration of the RM process in the business process, thus mitigating individual process risk. Timely reviews with involved stakeholders are necessary to achieve full process integration and protection. Organizations without formal risk management steps can manage risk in the unplanned, reactive decision and evolve method to create resiliency. Small and large organizations can benefit from a focused and iterative RM.

Risk mitigation strategies require a timely and comprehensive assessment of feasible courses of action to protect the organization from risk. The DoD RM Process training, simulations and exercises, SecDef, and specialized RM team support are available resources. Risk mitigation involves developing a plan of action to reduce the probability, reduce the consequences, or impact of an undesirable event. This reduces the overall risk within an acceptable level. A deliberate and continuous assessment of feasibility, security, effectiveness, survivability, interoperability, and risk evaluates the satisfaction of the stakeholders. The RM assessment step begins after determining the significance of each risk within the context of the organization’s mission and strategic goals. After assessing your risk mitigations, you will build a portfolio of identified actions and proposed risk mitigations.