PIP - Productivity Improvement Programmes Program ... - MPC

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PRODUCTIVITY & INNOVATION ENHANCEMENT PROGRAMMES 2012
PIP 124:
RISK MANAGEMENT
RATIONALE
Risk Management is the process of figuring out the risks in a certain
situation, and hence reducing the possibility of its occurrence. In some
cases, the amount of risk that is acceptable is nil, whereas sometimes
it can be higher. These risks could be due to natural causes such as
accident or even deliberate attacks. In the corporate worlds, risk
management is an organized activity that reduces uncertainty in the
business. However, there are procedures that must be followed by
people who are responsible for this risk management task in order to
reduce the risk as much as possible.
When managing risks, the most common process is to first take care
of the risks with the greatest loss and the greatest probability of
happening. After this, the risks with lower probability and lower loss
are handled. However, it can be difficult to determine these costs and
probability, so the chances of mismanagement in this fields usually
remain high. It is also very difficult to figure out how much resources
must be allocated into risk management. On one side, this has the
potential to save money and/ or lives should the risk become a reality,
but on the other hand it seems that the money spent on this can
be spent activities that can help in earning money for the company
or government. Therefore, there is an opportunity cost to risk
management, and it is important to figure out how much expenses it
requires.
OBJECTIVES
At the end of this programme, participants should be able to:
• Identify and manage (take preventive action) the uncertainties
• Integrate concerns for risk into an organisation’s daily decision
making and implementation process
• Recognise resource allocation implications
• Understand the opportunity cost or trade-offs with any decision