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Nature and Scope of Risk Management

Risk management is a strategic process that systematically addresses risks to achieve sustained organizational benefits. It identifies and treats risks to maximize value across all organizational activities. The objective is to increase success probability and reduce failure probability and uncertainty regarding goal achievement. Risk management should be continuous, addressing all past, present, and future risks surrounding the organization's strategy and its implementation. It must be integrated into the organizational culture through effective policy and senior management-led programs to support accountability and performance across all levels.

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5K views

Nature and Scope of Risk Management

Risk management is a strategic process that systematically addresses risks to achieve sustained organizational benefits. It identifies and treats risks to maximize value across all organizational activities. The objective is to increase success probability and reduce failure probability and uncertainty regarding goal achievement. Risk management should be continuous, addressing all past, present, and future risks surrounding the organization's strategy and its implementation. It must be integrated into the organizational culture through effective policy and senior management-led programs to support accountability and performance across all levels.

Uploaded by

mba department
Copyright
© © All Rights Reserved
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Download as DOCX, PDF, TXT or read online on Scribd
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SCOPE OF RISK MANAGEMENT

Risk management is a central part of any organisation’s strategic management. It is


the process whereby organisations methodically address the risks attaching to their
activities with the goal of achieving sustained benefit within each activity and across the
portfolio of all activities.
The focus of good risk management is the identification and treatment of these risks.
Its objective is to add maximum sustainable value to all the activities of the organisation. It
marshals the understanding of the potential upside and downside of all those factors
which can affect the organisation. It increases the probability of success, and reduces both
the probability of failure and the uncertainty of achieving the organisation’s overall
objectives.
Risk management should be a continuous and developing process which runs
throughout the organisation’s strategy and the implementation of that strategy. It should
address methodically all the risks surrounding the organisation’s activities past,
present and in particular, future.
It must be integrated into the culture of the organisation with an effective policy and
a programme led by the most senior management. It must translate the strategy into
tactical and operational objectives, assigning responsibility throughout the organisation
with each manager and employee responsible for the management of risk as part of their
job description. It supports accountability, performance measurement and reward, thus
promoting operational efficiency at all levels.
Risk management protects and adds value to the organisation and its stakeholders
through supporting the organisation’s objectives by:
a) providing a framework for an organisation that enables future activity to take place in
a consistent and controlled manner
b) improving decision making, planning and prioritisation by comprehensive and
structured understanding of business activity, volatility and project opportunity/threat
c) contributing to more efficient use/allocation of capital and resources within the
organisation
d) reducing volatility in the non essential areas of the business
e) protecting and enhancing assets and company image
f) developing and supporting people and the organisation’s knowledge base
g) optimising operational efficiency

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