What is risk management for a business?
Risk management is essential for any business as it enables a company to implement projects successfully. It is the way to identify, evaluate, prioritize, and address risks. There are at least five reasons why risk management is important for the business. First, when a company develops a project, it is crucial to foresee possible risks to be able to address them to implement the plan. Secondly, in such spheres as coal and gas mining, machinery, etc. ability to foresee and address risks can save many lives. Risk management also helps make the project more cost-effective. If it is possible to diminish risks at the stage of planning, this will save funds that could be spent on addressing the risks during implementation. The ability to manage risks also saves a lot of time. Finally, risk management helps companies remain competitive as they reduce time and funds spent on the implementation of their projects.
What are the steps involved in risk management analysis?
Risk management analysis involves several major steps that are similar for all spheres. Of course, there are some peculiarities as possible risks differ in every business. The first step is planning. Here the risk manager should identify the goals of the project, stakeholders, and possible risks. For instance, gas mining is associated with risks of accidents causing employee’s injured, hazards to the environment, and people living nearby, damage to the company’s property. When risks are identified, it is essential to focus on conditions that can lead to an accident (when, where, what exactly can happen, etc.). It is necessary to develop a certain plan to address the risks or prevent them, if possible. It is also important to develop monitoring strategies to make sure the plan is followed. Finally, it is important to assess the effectiveness of the plan when the project is over.