Identification of Risk within Dream Catcher - Essay Example

Risk Management in Dream Catcher Risk Management in Dream Catcher Risk management refers to identification, assessment, as well as prioritization of various forms of hazards that an organization is faced with along its line of operation (Crouhy, Galai & Mark, 2006). The main role of risk management is to enhance effective coordination and application of relevant resources economically for purposes of minimizing, monitoring, or controlling likelihood or probability as well as the impact of the hazard, also known as the unfortunate events. There are five steps involved within the risk management process in Dream Catcher is concerned (Crouhy, Galai & Mark, 2006). Dream Catcher, a first nation Canadian-based organization that mainly export to China, identifies, assess, analyzing (developing controls and making various decisions in respect to risks), implementing controls, as well as supervising and evaluating the risk or hazard. These processes are essential in identifying the best way to deal with the problem. Whereas identification of risk within Dream Catcher involves defining the various types of hazards that the company is facing, analysis of risk entails understanding the likelihood of such hazardous aspects occurring within the business. Understanding the likelihood of risk happening within Dream Catcher involves the analysis of risk in terms of probability, frequency, and severity of the risks. In risk identification, Dream Catcher engages in activities that identify various stakeholders that are involved and likely to be affected by the occurrence of the hazard. Once risks and affected stakeholders are identified, there is monitoring and reviewing of the process coupled with communicating and consulting different stakeholders and branches within the Dream Catcher Company. Dream Catcher on the other hand, attempts to define the likely impact on the firm as well as the stakeholders. Such impacts may be economic, political, or social. Identification of economic, social, or political impact, consequence, or cost of risk within Dream Catcher Company is done during the analysis stage. Risk assessment refers to identification and assessment of the hazards an organization is facing individually (Crouhy, Galai & Mark, 2006). In most cases, organizations assess hazards collectively in a bid to reducing costs associated with applications of resources that help in reducing, eliminating, or transferring the risk. Dream Catcher uses the risk assessment matrix in order to estimate the degree of severity as well as the probability of the involved hazards. Risk assessment within Dream Catcher focuses on identifying various categories of risks or hazards. First, it aims at identifying the less severe but more frequent hazards within the organization. Another class of hazards that Dream Catcher identifies is the more severe but less frequent hazards (Crouhy, Galai & Mark, 2006). In this perspective, it means therefore that there are less severe hazards, which are very frequent while there are other hazards that are very severe but less frequent. After identification, analysis, assessment of risk, Dream Catcher attempts to develop best strategies for controlling the hazards. In order to develop the best risk management or control strategies, Dream Catcher usually ranks the risks according to the management and impact priorities. The basis of such ranking is category of risk as well as rating on the likelihood and possible consequence or cost of the identified hazard. Ranking of risk within Dream Catcher is important in order to ensure that resources are channeled to severe risks despite their low frequency. Channeling of resources towards risk management is an important aspect as it enhances the effectiveness of controlling risks and hazards within the organization (Crouhy, Galai & Mark, 2006). Dream Catcher therefore; rank the risk depending on their severity as well as frequency in order to be able to fully maximize available resources for the mitigation process of the risks or hazards. After ranking of the various risks that Dream Catcher face, the firm engages in developing, drawing, and implementing a plan that has specific counter-measures towards the already identified and ranked hazards. While developing the plan, Dream Catcher usually considers priorities, resources, and risk acceptance. In this perspective, priorities refer to all the operational and strategic moves that Dream Catcher may be involved in with an aim of treating various forms of identified risks and hazards. Resources on the other hand refer to all the technical, human, as well as financial services and requirements that the organization may deem fit for treating the risk. Lastly, risk acceptance defines the level and classification of risks following their rankings. Rankings may result into classification of risks as low, medium, or high (Crouhy, Galai & Mark, 2006). This aspect of risks is vital in treating the risks effectively and efficiently. Dream Catcher uses different strategies in treating identified and ranked risks or hazards within the organization. The strategies include transferring risks to other parties, developing strategies and operations that reduce negative effect of the risk, compromising to accept part of all of the consequences that the risks bring to the firm, and avoiding the risks in circumstances where they can never be controlled, reduced, or eliminated. The type of risk will determine the right strategy to employ in treating the same. For instance, natural calamities or catastrophes may never be controlled, reduced, or eliminated. In this case, Dream Catcher will go for avoidance of the risk as the only effective strategy. Transfer of risk to other parties involves insuring the identified and ranked risks (Crouhy, Galai & Mark, 2006). Most of the risks transferred to insurance companies usually involve low frequency but high severity such as fire. Therefore, Dream Catcher will be able to identify an effective and efficient strategy as determined by the type of risk or hazard identified. The last process that the organization engages in within the risk management process is the evaluation of all the aforementioned stages and activities. All the strategies, operations, and resources engaged in risk management plan are evaluated for their efficiency as well as effectiveness. What’s more, Dream Catcher through evaluation will be able to follow through its risk management plan in a bid to identifying whether the plan is meeting its objectives and aims as already identified. Evaluation of the risk management plan and process is important since it assists Dream Catcher in identifying further resources that may be needed in order to complete the process effectively (Crouhy, Galai & Mark, 2006). It is important to engage in evaluation since it provides an overall view of the progress of the risk management plan. Indeed, risk management is an important aspect in any organization since all organizations are faced with different forms of risks. Reference Crouhy, M., Galai, D. & Mark, R. (2006). The Essentials of Risk Management. New York, NY: McGraw-Hill. Read More