Function of Risk Management
- Created by: lineventer
- Created on: 26-11-18 14:05
View mindmap
- Risk Management Function
- Definition
- Process of analysing a business' exposure to risk and determining how to best handle and minimise such exposure
- To have a responsible and successful business- risk management plan to protect people and physical assets
- Pure risk- Threat of loss over which business has no control (legal fraud, theft and uncertainty in financial market). Speculative risk- chance exists of making profit/loss but business calculates those risks
- Reduce the risk- loss prevention programmes introduced (sprinkler for fire) Avoid risk- Business will try and aviod risk. Self-insure against risks- sets aside funds cover a loss in event of fire, Insure against risks- Bear risk of fire for a premuim
- Role of Risk Management Function
- First threats or risks identified, second vunrability of assets in relation to identified threats examined. Then figure out ways to reduce risk and prioritise risk management procedures on importance
- Forulate a strategy for management of that risk- budgeted for, transfer risk to another party by insurance, closing down high-risk area to avoid risk or risk's negative effects reduced
- Definition
Comments
No comments have yet been made