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The Risk Management Fable


There are people who seem to live in panic mode. For them, the sky is always falling. They live with “Chicken Little” syndrome and fear that the sky is about to hit them in the head. The slightest distraction at work sends them into a panic and they go running around infecting others with a sense of panic. Success seems to come for the Chicken Little only after others join in the sense of panic, and they also become infected with the same sense of panic and start sharing urgent Chicken Little to run off and do something. That’s when Chicken Little forms a committee and they all march off to tell the king that the sky is falling.

If you are a manager of Chicken Little, you need to learn to distinguish between real problems and imaginary problem and you need to find a way to stop these disruptive organizational panic attack. Of course, if the sky were falling it would be good to know, but is this the way you want to control the problem? It will help if there is no one on your staff as “Henny Penny” or “Lucky Ducky” also have become standing members of your “Falling sky is” committed. It is never good for a company to have its employees work in panic mode, especially when serious problems to come by.

Chicken Little is a man on a team that has a tendency to panic at all. He thinks constantly having to call an emergency meeting, every action must be taken outside the normal process and each one needs to stop what they are doing and join Chicken Little to imagine what will happen when the sky falls. We have to fix this now … now … now … Chicken Little syndrome thrives on chaos. “There is no time to do things properly.” “We just have to get it done now … now … now …” “We can do it the right way next time!” You can not take the time to follow the process when the sky is falling! Damn bureaucracy, it’s time to jump into the water and start swimming! Even if the problem is serious, this is really the way you want to manage your business?

Running from one chaotic situation to another can become a culture of business. Remember, though, in this fable sky is not really falling. Fear of what might happen to take control of all types. “A customer came with a problem and what happens if the others come across the same problem!” “Maybe we should stop production and go take care of the problem, instead of introducing a new competitive changes the customer is asking for.” The acorn that hit Chicken Little in the head may have done more damage than we originally thought! Chicken Little does not distinguish between big problems and small children, and before you realize it even a little problem caused the team to lose concentration.

When you feel you have setup a panic attack, you’re better off sticking with a trusted process, not abandon them. You may find out the sky really is falling and the water is not as deep as it seems, but it’s also a chance that you have identified a significant problem. It’s time to avoid panic and make a calm decision will affect the problem and how to solve it. And all businesses that can and do go awry. If the problem seems to have fallen from the sky and you were caught off guard by it, you need to start asking some questions about your activities. The process you should have had in place before hand is a proactive risk management process. Many companies (and not all of them are low) failure to perform risk self-assessment that could improve their chances of staying ahead of problems. Chicken Little may have got it wrong but at least he was looking for a problem. Each company is required to perform the functions of risk self-assessment at least annually. In my work I hear regular customers say “I saw the signs, but I just was not paying attention to them.” Perhaps now is the time to give Chicken Little bit of credit but just walk not panic …

Instead of running around and calls a meeting of “The Sky is Falling” team, an effective risk management process will allowing you to identify potential risks, whether they are just Acorn or sky really is falling and make a plan to avoid or reduce risks. Remember though that Chicken Little was not to deal with risks. He was dealing with a problem. “The sky is falling, the sky is falling, it hit me in the head.” If the sky is falling when it is too late to prevent problems. At that point, the risk has already been realized. To be of help, Chicken Little needs to identify potential problems before it happened. A risk that the event will occur in the future that could have a negative impact on your business. Chicken Little required to yell “The sky could fall ,. The sky could fall” But think of the advantage would give the company … Considering something was going to happen in the future that could cause the acorn to fall (it’s wind storm predicted for tomorrow) does Chicken Little had not yet felt the impact to his skull, the danger could be avoided or reduced. Chicken Little could avoid walking under oak tree or wear a hat in the wind. In both cases would no longer need for panic. The risk would be proactively identified and expected problem in time to prevent or reduce it

The moral of the story (each illustration has at least one) is. if your organization has someone with Chicken Little syndrome, anxiety turn their assets by managing them in useful activities such as risk management, wear a hat when you walk under the oak tree, and (most of all) perform the functions of the risk management process, which calls for an annual assessment. And one final note. The reason I hear most often from customers that they submit annual assessment is that they just can not afford to take time. Really! Risk improves the sustainability of the company. Unless you’re afraid of what is found (ostrich syndrome!), Or your business has never a problem, how can you afford not to evaluate business phone?


7 steps to develop the RMP


Risk is real for any company or organization. Do not kid yourself. Things happen when you least expect them to happen. Are you ready for the unimaginable, unexpected, unwanted? As a manager, you put your head in the sand about the risk? Are you pretending that all is well, and nothing will change? If so, it’s time to face reality: data gets lost, buildings burn, people say. When any of this happens, the organization is at risk of interference, inefficiency, chronic struggle, revenue loss, and even total failure. Is this the way you want to go down?

Starting now, you can initiate the process to develop the RMP your organization. Take control. Forming a committee member board of directors and staff, and ask them to partner with you to make this important document. Make sure everyone understands the importance of work, and show them how they can benefit from contributing to the final product. Risk management plans are not optional; they are essential for every business, large or small. There are no valid exceptions

perform the following seven steps, and give yourself and other large slice of serenity :.

1. Define what risk looks for your business.

What constitutes risk in the shop? Threats to normal operation? Threats or compromises to ensure the safety of people? Loss of physical and electronic assets? Loss of income? Decreased public / community support? Unethical behavior? Create a comprehensive definition of risk, which means something for you and your business.

2. Identify specific risks.

Ask the committee to brainstorm as many different risks they can possibly imagine. Take them on a white board or flip chart. Examples of different risks are: the firing of CEO declining interest in one of the main products, departmental silos Board infighting, inability to fundraise, the economic downturn, layoffs, build a fire, computer crash, philosophical differences between key employees, long sheets for executives, disruption of get the necessary supplies. All these are potential risks, and there are many others. Continue consideration where the group believes they have come up with an exhaustive list.

3 categories each stop.

Determine category names identified risks. Examples may include: executive, administrative, physical property, technology, data, personnel, products or services, customers / clients, stakeholders,. Set each risk under one of the selected categories. Create as many names category you need.

4. The status of each risk according to severity or significance.

Select headings like “most severe”, “moderate”, “minimal concern”. You do not use that word to headlines, but be sure your sentences distinguish sufficiently between levels of severity. Perhaps you would like to color code each risk under significance level headline: red for “serious”; black for the “moderate” and green for “minimal concern”. Set it up as best works for you and your business.

5. Develop strategies to reduce or prevent any risk.

Start risks under your “serious” plans. It is important that you not delay thinking about possible solutions for the major issues. Ideally, determine the multiple strategies for each risk. Be sure to consider that within the company is going to be responsible for the implementation of various strategies and resources needed to implement them. Skip this information from the plan only causes big problems later.

6. Write the plan.

With all of the above input, develop a readable document. Efficiency is paramount here. The plan is worthless if no one can follow it, interpret it, or indeed to rely on it as a guide during the crisis. After that, taken together, seek feedback from the committee as well as other employees and board members. Embed changes there. Check for signs of common sense over the document. Hold yourself accountable to a high standard of rationality. A pie-in-the-Sky risk management plan does not serve anyone.

7. Try any of the methods in the plan of efficiency.

Do they work? Can they win? Why or why not? Where are the pitfalls? What steps are missing? Would you benefit from having certain outside experts review your plans? If so, what types of professionals?

Changes to the plan may occur annually, as situations arise and your company lives one or two of the strategies firsthand. Hindsight is often wiser. Do not be afraid to throw some program content when you know for a fact that this is what you must do. Remember: the plan needs to be current. On the day you least expect it, someone has to catch this document, refer to a particular part of it, and act on it -. Fast


Risk Management: What is the goal


A recent study has shown that many companies have not yet properly implement such a program, but most companies recognize the need level good risk management program. An even greater number have said that they were developing a program while more than half of the companies polled in the study said they had taken up a system to take risk into account. However, these actions are far from enough and had actually stopped altogether in some cases, according to the follow-up study. Only a third of the companies participating in this study have been implemented a system and had a staff well trained to deal with risk issues, this is a two percent decrease from the previous year.

There is more than a little difficult to understand how anyone could not follow through on such an important aspect of protecting their company against such threats to not implement fully developed risk management program, given the large number of unpredictable variables and risk factors now plaguing the economy and the corporate sector as well as the recent crackdown on corporate governance and fraud practiced by the government agencies.Though most suggested that it should be executive-level officer, the exact allocation of duty ends there, and part of this here seems to be disagreement about each responsible for develop and maintain such a program should fall.Human venture capital, strategic risk, compliance risk, enterprise risk and credit / market risk is also contributes to various departments and causes of risk that seems to complicate matters.

Unfortunately, to have any chance of success, it is precisely these challenges that will face risk management program, companies should begin to create this program with this in mind. Develop a basic understanding of the various risks facing organization and insight to assess the level and potential of these threats is, at its core, the basic mission of any risk management program. This will require well-trained and dedicated group of employees to take it effectively this is a big job for any company to make. Also, these programs are full-time and not something that can be set up and then check in every now and then and this is one of the biggest issues that many companies fail to recognize when placing áhà | ttustýringarkerfi value is. On the contrary, changing compliance regulations, incidents of corporate fraud and a number of other circumstances, to be truly effective, risk management team will be working all the time to keep track of new threats that may arise from the chaotic world market.

So, while there are numerous factors to take into account and assured, this is no excuse for companies failing to develop and implement a risk management program, but the question of disposal of responsibility is one of the company’s management will work by themselves.Admittedly, itís not an easy task to develop a strong plan, one that can stand up to all the various types of threats facing companies regularly, although it is necessary one if companies do not want to find themselves caught off guard when such problems arise.


Project Management – Risk Management


There are a few things to consider when identifying risks in the project. Risk is known as some future happening that leads to changes in the environment. It has associated with it a loss can be estimated, the probability that the event will occur, which can be estimated, and a preference on the part of the project team manager on what to do, if anything, to reduce risks and reduce losses that will occur.

During the project planning process, risk assessment is usually completed with the development of the business case is reviewed and updated by the project team. The risk assessment is a formal estimate of the probability of project success. Risk assessment is an obvious effect on management style, team structure, the use of methodologies, strategies for development of the system, and, last but not least, the business decision to approve the project.

Simply, the greater the risk of the project, the greater the likelihood that the plans, schedules, and planning will be wrong and that the project will bring “out of control”. The risk of a project may be the based on the following;

  • What are the risks
  • ?

  • What are the chances of losses caused by them?
  • How much the losses are likely to cost?
  • What could be a loss if the worst happens?
  • What are the alternatives?
  • How can the loss be reduced or eliminated?
  • will produce alternative other risks?

The business decision is to assess the expected loss with the cost of defraying all or some of the loss and then take appropriate action.

It is mandatory, the system development process, especially in project planning, project consider these risks task criteria using the formal questionnaire developed to reduce the risk list. If the project considers a combination of these factors is important and contributes to the degree of risk of the project, he or she is encouraged to consider the following actions

  • Take steps to limit the scope of the project to reduce its complexity
  • Document area complex in the project plan and allow for more time / resources
  • Raise Risk formal Memorandum that details high-level elements, identifies the potential impact of their activities / available to reduce the impact or reduce the risk factor.

It is important that risk management project is considered a preventive measure. For example, before the start of the full development cycle, the project should negotiate with the Steering Committee, the key stakeholders and strengthen to reduce high-risk factors.

To increase the probability of project success, the project team must put in place a plan that identifies the risks and measures to reduce the risks. The management and minimization of project risks is the responsibility of all parties involved in the project.


Risk Management


Every company should be part of the risk. The risk management is an important process in many organizations. Depending on the company, steps can be taken to reduce the frequency and extent of risks. Risk management is a process or group in an organization that takes management actions to reduce risk. This activity includes a process to measure and develop strategies to manage risk. The methods used are transferring the risk to another party, avoiding the risk, reducing the negative effects of risk and accept some or all of the consequences of a particular risk.

There are two types of risk. Traditional risk management is focused on the risks posed by physical and legal reasons such as natural disasters, accidents, or death lawsuit. Financial risk management focuses on risks that can be managed using traded financial instruments. Large companies employ risk management team for the smaller business practice informal, if not formal, risk management strategies that are rolled into responsible operations management. Risk managers recognize and reconsider their organizations loss exposures include property, liability, workers and net income. This helps to promote growth through profit or loss, stable operation and a stable income.

The role of risk management is to plan and implement strategies to manage or mitigate the risks the company is exposed. This planning involves a five-step process. The first step is to identify potential risks. The process to find the risk may depend on culture, industry practice and compliance. Once risks have been identified, the next step is to assess the potential severity of loss and probability of occurrence. The third step is to find a possible treatment for the problem. This may include transportation, access, reduction or retention of potential risks. Next is to implement the plan by choosing the right method of treatment. Before implementation, review and evaluation of the program is necessary.

first risk management plans are never perfect. Practice, experience and actual performance, the necessary changes to the plan. The plan should make room for flexibility in decision-making. Risk is considered art circles management experience and exposure situations helps master this art.


Risk Management


In every human endeavor there is an element of risk; personal, project or financial, or a combination of them all. The job is responsible for the individual is to identify risks and act accordingly. We do all this “risky” things almost every day, knowing that we are taking a risk. Rather than staying away from danger to become adept at identifying it and have a plan to deal with it if the risk. This is what the risk is, and the skills that are important in almost all endeavors.

The popular misconception that risk management is difficult or complex caused by the bureaucratic methodology of some system-oriented institutions and managers. It is not complicated or bureaucratic and need not be. Risk management is basically a simple proposition with complex dictated by nature as it applies – usually projects and parties. The basic form of risk management involves:

1. Define risk – Look for something that threatens the successful completion of the project to the original claims. Risk can be environmental, organizational, technical, legal, economic or commercial.

2. against risk – taking action to remove or minimize the potential risk to materialize. The response depends on the nature or severity of risk.

3. Acting when the risk event occurs – Invoking what contingency measures were devised for the risk has materialized

And for this to happen requires

4. Monitoring at all levels – This usually means record risk assessment profile that identifies risks, probability of its occurrence, and the impact if it is realized. Factors that score priority are those that require the most attention and monitoring. A good risk manager will devise contingency plans that reduce either the likelihood or impact of these events, and remove them from the field.

Work within a formal structured system similar to that defined ISO9001 requires the application of risk assessment practices to meet the requirements of the standard. Auditors such systems can not find specific references to risk in these areas, even if the identification of potential failure (8.5.3) is wholly concerned with the issue is nothing less than the risk.

Well managed risk taking is an important aspect of any forward thinking company, where risk is a factor in all progress or improvement. It is approved risk associated with the continuing need to drive out of a comfortable position that leads to progress and advancement. Do what we always do only because the risk seems to be negligible or are well known to be a ‘risk averse’, and progressive organizations can not be acceptable. Neither is it acceptable to pursue new ideas without understanding the potential benefits of, proper planning is a clear idea of ​​the threats to these benefits achieved, and policies to deal with them should they materialize. We need to manage in a way that is neither predictable or careless. Risk assessment is an important tool to support this strategy. We ignore it at our peril …

Copyright (c) 2008 Ed Bones


Risk Management


Risk Management is the process of measuring or assessing risk and developing strategies to manage it. Strategies include transferring the risk of another party, avoiding the risk, reducing the negative impact of the risk, and accepting some or all of the consequences of a particular risk. Traditional risk management focuses on the risks arising from physical or legal reasons.

Financial risk management, on the other hand, highlights the risks can be managed using traded financial instruments. Regardless of the type of risk, all large business risk management teams and small groups and business practice informal, if not formal, risk management.

ideal risk management starts with the creation of context, inclusive identity and objectives of stakeholders, as the basis of the risk will be assessed and define a framework for the process and program for the identification and analysis. The next step in the process is to identify potential risks -. Event when triggered, cause problems

The risk identification can start with the source of problems, or the problem itself. Once identified, they must then assess the potential severity of loss and probability of occurring. After the decision on a combination of methods to use for each exposure shall be. What risk management decision should be recorded and approved by the appropriate management level.

In as much as no first risk management plans will be perfect practice, experience, and actual loss results will necessitate changes in the plan and contribute information to allow possible other decisions to be in dealing with the risks faced. In the end, risk analysis results and plans should be reviewed, assessed and updated regularly.

Risk management also faces difficulties allocating resources. This is the concept of opportunity cost. Resources spent on risk management could have been spent on more profitable activities. Again, ideal risk management reduces costs while maximizing the reduction of the negative effects of risk.

If risks are improperly assessed and prioritized, time can be wasted in dealing with risk of losses that are not likely to occur. Spending too much time assessing and managing unlikely risks divert resources that could be used more profitably. Unlikely do occur but if the risk is unlikely enough to occur it may be better to simply retain the risk and deal with the consequences of the loss is in fact occur.

Prioritizing too much risk could keep organization from ever completing a project or even start. This is especially true if other work is suspended until the risk management process is considered complete.

Risk is simply carrying out a systematic analysis, assessment of the severity, choose cost effective strategies to minimize the impact of threat implementation risks to the organization. All risks can never be completely avoided or reduced simply because of financial and practical limitations. Therefore, all organizations have to accept some level of residual risk.

Copyright 2007 Ismael D. Tabije