What is Personnel Administration ?
Employees form the core and the backbone of any organization and public organizations are no different. According to authors William Mosher and J. Donald Kingsley, the key to better governance lies in effective personnel management. For effective personnel administration there are certain criteria that need to be fulfilled like: Highly qualified workforce of civil servants […]
Total Returns Swap
Credit default swap is the most commonly known derivative which is based on swaps. However, it is not the only one. There are many types of swaps that are used for managing credit risk. In this article, we will have a look at the total returns swap which is commonly used in credit risk management. […]
Functioning of Human Memory
The study of human memory since ages has been a topic of interest for the school of cognitive psychology. Human memories of all individuals can never be same. Human memory refers to a process of acquisition, storage, retention and retrieval of information. Human memory has the ability to store and recall the previously learnt information, […]
People and Agility: Creating an Agile Workforce
Change is invariable and undeniable. Product lifecycles have shortened. Geographical boundaries are diminishing. Technology advances in the blink of an eye. Time to market has reduced. Delivery time has compressed. Innovation is faster and more frequent. Conformity is dying. Future is already here. How to deal with this? This is the question that’s been on […]
Advertisements and Public Relations
Advertising and public relations are two different industries altogether. Let us carefully examine the difference between advertisements and public relations: Organizations need to pay for every single advertisement aired on television/radio. Organizations need to buy space/slots in various newspapers, TV Channels, Radio Channels to advertise about their organization/product/service. Public relations experts strive hard to gain […]
Literally speaking, risk management is the process of minimizing or mitigating the risk. It starts with the identification and evaluation of risk followed by optimal use of resources to monitor and minimize the same.
Risk generally results from uncertainty. In organizations this risk can come from uncertainty in the market place (demand, supply and Stock market), failure of projects, accidents, natural disasters etc. There are different tools to deal with the same depending upon the kind of risk.
Ideally in risk management, a risk prioritization process is followed in which those risks that pose the threat of great loss and have great probability of occurrence are dealt with first. Refer to table below:
| IMPACT | ACTIONS | ||
| SIGNIFICANT | Considerable Management Required | Must Manage and Monitor Risks | Extensive Management essential |
| MODERATE | Risk are bearable to certain extent | Management effort worthwhile | Management effort required |
| MINOR | Accept Risks | Accept but monitor Risks | Manage and Monitor Risks |
| LOW | MEDIUM | HIGH | |
| LIKELIHOOD | |||
The above chart can be used to strategize in various situations. The two factors that govern the action required are the probability of occurrence and the impact of the risk.
For example a condition where the impact is minor and the probability of occurrence is low, it is better to accept the risk without any interventions.
A condition where the likelihood is high and the impact is significant, extensive management is required. This is how a certain priority can be established in dealing with the risk.
Apart from this, typically most of the organizations follow a risk management cycle. Refer diagram below:
According to this cycle there are four steps in the process of risk management.
The first step is the assessment of risk, followed by evaluation and management of the same. The last step is measuring the impact.
Risk identification can start at the base or the surface level, in the former case the source of problems is identified. We now have two things to deal with the source and the problem.
Risk Source: The source can be either internal or external to the system. External sources are beyond control whereas internal sources can be controlled to a certain extent. For example, the amount of rainfall, weather over an airport etc!
Problem: A problem at the surface level could be the threat of accident and casualty at the plant, a fire incident etc.
When any or both of the above two are known beforehand, certain steps can be taken to deal with the same.
After the risk/s has been identified then it/they must be assessed on the potential of criticality. Here we arrive upon risk prioritization.
In generic terms ‘Likelihood of Occurrence × Impact’ = Risk.
This is followed by development of a risk management plan and implementation of the same. It comprises of the effective security controls and control mechanisms for mitigation of risk.
A more challenging risk to organizational effectiveness is the risk that is present but cannot be identified. For example a perpetual inefficiency in the production process accumulates over a certain period of time and translates into operational risk.
Your email address will not be published. Required fields are marked *
