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Risk management

 

Risk management

 

Risk management is an important management method which assists in handling the unexpected impact of a risk. Risk analysis, risk areas and risk management program will prepare the organization to take on risks without affecting the business as a whole.

 

Risk analysis:

It is a qualitative approach that uses various tools of assessment to work out and rate the risks for the purpose of assessing and resolving them.

 

Risk perception   :

 

·       Identifying the areas of risk,

·       Predict the uncertainties,

·       Perceive the impending risk

 

Risk assessment:

 

·       Financial exposure in the event of a threat,

·       Root cause analysis of a  risk

·       Influence of the risk on the business

 

Risk mitigation:

·       Loss minimization

·       Methods to stop recurrence of such risks

 

Risk Control        :

·       Controlling threats to the company’s capital and earnings by way of  risk transfer i.e. insurance/provisioning/budget

·       Contingency plans that can be deployed in the  future

 

Risk areas:

 

Risks may arise due to

 

·       Financial uncertainties

·       Legal liabilities,

·       Technology issues,

·       Management errors,

·       Accidents and natural disasters

·       Process Risks

·       HR related

 

Risk management program:

Risk management program helps to examine the risks fully and the impact they could have on an organization’s goals. Smart risk decisions will keep the finances and liabilities under control so that the setback received in view of a loss or threat is reasonably stabilized.

Risk Management therefore attends effectively to the unexpected, by way of planning ahead  damage control, and provisioning/budgeting  for the envisioned loss or damage

Once risks are managed it is easier to analyze which risks are worth taking, which ones have enough of provisioning   and which need further analysis.

Summary

Broadly, risks can affect a Company’s survival and growth and also for a new entity which is in nascent stages of business .It is important to understand the basic principles of risk management and how they can be used to help mitigate the effects of risks on business entities

Risk management provides a business with a basis upon which it can undertake sound decision-making.

 

Disclaimer:   

Zen Insurance is an IRDAI registered broker which facilitates quick & accurate insurance broking services. We deal with only regulator approved products of insurers. We do not underwrite the products

 

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