Risks are common to any organization or business. Every organization requires to manage the
risks discovered and threats that can harm the reputation and assets of the organization.
Different organizations possess distinct types of risks based on their work strategy and
procedures. This blog post is about risk management with examples.
Managing risk in defined fields to implementing it in each sector has increased its
significance in the organization, industry, business, and others.
Risk Management
Risk management is the process to identify, assess and control the threats that may harm the
organization’s assets and reputation. The risk originates from the uncertainty in finance, legal
liability, technology issues, strategy management faults, and others.
To solve or handle risk, a risk management framework is used to resolve the risks. Risk
Management Framework is a collective set consisting of criteria intended to architect, secure,
and monitor the system.
Widely Applicable Risk Management with examples are:
● Business Risk
Any company willing to establish or exposure at a large level should apply strategies to
handle business risk. In this, an organization has the ability to overcome threats to
manage financial goals.
● Political Risk
This risk includes the effects an organization may have due to unstable politics and
deviation in political behavior. The events causing this risk are war, revolution, civil war,
strikes, and terrorism.
● Financial Risk
This risk is the possibility of losing money invested in the business. Financial risks are
affected due to macroeconomic forces, deviation in the market risk, and loss in large
corporations.
● Product Risk
Product risk is defined as the unavailability or unsatisfactory behavior of the product. For
example, new technology, programming languages, and integration.
● Environmental Risk
Environmental risk occurs due to unwanted situations. The root cause is
mismanagement of waste, its transportation, treatment, or disposal.
A few examples are toxic waste, radiation, air contamination, and others.
● Health Risk
This risk increases the chance of developing a disease. Some examples are overweight,
obesity, tobacco, and mental health.
● Security Risk
Data security is the prime goal of any organization. Every organization ensures its
assets from data theft. There are many security risks discovered such as :
● Malware
● DDoS
● Phishing Attacks
● SQL Injection
● Password Theft
● Food Safety Risk
Food safety risk involves biological, chemical, and physically hazardous. This risk
originates from microorganisms, bacteria, and others.
● Supply Chain Risk
This is an unpredictable and misunderstood risk developed by customers’ demand,
interruption inflow of production. There are 4 types of risks:
- Strategy Risk
- Market Risk
- Implementation Risk
- Demand Risk
● Educational Risk
Educational risks are faced by students who don’t achieve the learning with desired
outcomes.
● Disaster Risk
This risk involves the loss of life, injury, destruction, and damage from a disaster.
Some of the examples are inadequate protection of assets, lack of public awareness,
poverty and education, construction of inappropriate buildings, etc.
● Compliance Risk
Compliance risk involves exposure to legal penalties, financial and material loss. A few
types of Compliance Risk are:
- Environmental Risk
- Process Risk
- Quality Risk
● Service/Process Risk
Service/Process Risk is the deviation or loss in revenue that occurs due to unbalanced
or inefficient processes.
Let’s discuss some major fields that are implementing and practicing risk management
at a large level.
● Risk Management in Business
In business, risk management is associated with the identification, monitoring, and
managing the potential risks with respect to diminishing the impact an organization
faces. Examples of risks in business are security breaches, data loss, cyber-attacks,
natural disasters, damage by fire, unexpected financial loss, and others.
● Risk Management in Banking
In banking, the main focus is to manage an institution’s loss, logical development, and
execution planning to handle potential losses. The major risks faced in banking involve
credit risk, operational risk, market risk, and liquidity risk.
● Risk Management in Project
Risk management in a project involves managing an uncertain event, evaluating and
mitigating risks.
● Risk Management in Finance
Risk management in finance is the process to handle financial loss or disruptions in an
organization.
Conclusion
Risk management is acquiring an indispensable place in any field or sector. Managing risks is
becoming an important requirement nowadays for effective workflow.
Risks can originate due to many reasons like unbalanced and improper work processes and
strategies.
There are various risk-handling frameworks and techniques that can be implemented
in an organization to stay away from the risk impact.
The risk management framework
comprises 5 steps to determine and mitigate the risk. Those five steps are risk identification, risk
measurement, risk mitigation, risk monitoring, and risk governing.
In risk management, an organization is intended to prioritize the risk and develop risk control
actions.