Risk Management
If you think there is no risk in your business, you are mistaken. Theoretical risks lurk everywhere. Every activity has an element of risk. Not even an ordinary human step is without risk. There is risk lurking in every process, in every business. What is risk management? [Risk management is a branch of management that aims to reduce risk. It includes both real and hypothetical risks. Risk management is a highly structured and iterative activity. Risk management consists of six basic stages, which together form a whole.
Risk identification
is the identification of all possible risks in a process. This is the first step. In this step, all possible risks are considered. The severity, probability level, and overall impact are not yet assessed.
2. Risk Analysis
Analyze each risk. Record each one carefully. The key word here is to understand the risk.
3. Risk Assessment
Evaluate the risks and their severity on a defined scale. It is also useful to create a comparison table listing each item according to its severity. The result of this step is a treatment procedure for the defined risks. The order of elimination according to severity and probability of occurrence is also determined.
4. Risk Management
Define options for managing and treating potential risks. This step includes the selection of specific procedures leading to the reduction or elimination of risks
5. These need to be accepted and accommodated. Thus, we are working with a certain degree of likelihood that predefined problems will arise. At this stage of the risk management process, we may conclude that the resulting risks are unacceptable to the process. In this case, we return to the beginning of the process.
6. Risk Monitoring
The risk management agenda is a living document. It must be reviewed over time and re-evaluated with each change. In practice, this means that every time a process (be it manufacturing or other) is changed, the risks are reconsidered. Detailed documentation of this review must be kept.
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If you think there is no risk in your business, you are mistaken. Theoretical risks lurk everywhere. Every activity has an element of risk. Not even an ordinary human step is without risk. There is risk lurking in every process, in every business. What is risk management? [Risk management is a branch of management that…