Recently, more and more often in the news and in thematic articles, you can find the concept of risk management. And now many experts talk about risk management as a separate management system.
Instructions
Step 1
Every organization, be it a small company with five employees or a huge multinational corporation, faces risks. Of course, the risks that it faces also depend on the size of the company. To understand risk management as a management system, it is important to define the goals of the company.
Step 2
The most common goal of a company is to make a profit. However, it should be noted that this goal hides deeper tasks, namely the development of the company, stable operation, expansion, etc. Upon receiving sufficient profit, even a small company gradually invests the funds received for further development. And in this regard, the prevention of risks and the ability to manage them becomes an important task for any company.
Step 3
Risk management is aimed at organizing work to reduce the degree of risk in an uncertain economic situation. This is a whole system of risk management, as well as various types of relationships: economic, financial, legal, etc. Risk management includes both strategy and management tactics.
Step 4
If we consider risk management as a management system, then two subsystems can be distinguished in it: an object and a subject of management. The object of management is understood as the risk itself and risky capital investments, as well as economic relations between economic entities. Examples of such relationships include relationships between business partners, competitors, customer and supplier, etc. The subject of management is understood as a special group of people that carries out the functioning of the object.
Step 5
Through risk management, it is possible to determine future deviations from the calculated results, after which they can be managed. However, proper risk management requires a clear distribution of responsibility both among top management and at all levels. Top management should simultaneously act as both the initiator of the implementation of the risk management system and the control body. The decisions made should not contradict the legislation, international acts and internal documents of the company.
Step 6
At the moment, there are several standards for risk management in different countries of the world. These include: Risk Management Standard of the Federation of European Risk Managers Associations, Australia and New Zealand Risk Management Standard, UK Risk Management Code of Practice, ISO 31000: 2009 Risk Management. Principles and guidelines”of the International Organization for Standardization (ISO).
