Contact Us
Sign In / Sign Up for FREE
Go to advanced search...

Risk Mangement - Research Paper Example

Comments (0) Cite this document
Risks are spread across different environments, and the management of such risks takes differentiated approaches. Under the risk context, moral hazard and adverse selection are two common practices (Lam, 2003)…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER97% of users find it useful
Risk Mangement
Read TextPreview

Extract of sample "Risk Mangement"

Risk Management Affiliation: Encountering risks is normal in and out of the business environment. Risks are spread across different environments, and the management of such risks takes differentiated approaches. Under the risk context, moral hazard and adverse selection are two common practices (Lam, 2003). While these two practices are significantly different, they are characterized by a close link and relationship due to the manner in which they are practiced in insurance and risk management. The difference between the two practices is derived from their actual application in insurance or risk management.
Moral hazard is a situation where an insured party will tend to take risks due to the fact that any losses that could result are covered by the insurer. Under normal circumstances, the insured party could work to avoid risks or minimize them but chooses not to due to the insurance cover that this party enjoys. On the same note, moral hazard is realized when an insured party seeks to maximize the benefits offered by the cover. For instance, a person with health insurance is likely to visit a health care facility more times than he/she could in the event that the health insurance cover is not available. This same case applies in the business environment, where business enterprises can take more risks under the notion that any losses or costs are covered by another party.
On the other hand, adverse selection is the situation where decisions are made under uncertain circumstances, which primarily entail access to asymmetric information (Lam, 2003). The results realized in the process are in most cases undesired. In a buyer-seller context, the two parties could have access to different information that consequently influence one or both parties to make decisions or settle at some results that they could not choose if they initially had the same information. Moral hazard and adverse selection can actually exist independently, but their application is highly intertwined.
Risk-averse individuals outnumber risk takers. Many people go to high extents to avoid risks, with only a significantly low figure choosing to take ultimate risks. For instance, the number of highly entrepreneurial firms in the business environment is low. This is because highly entrepreneurial firms are risk takers, and risk taking raises the chance of making losses. However, when a high-risk business activity succeeds, the profits reaped are enormous.
Risk management is a fundamental practice in the organizational setting. Firms work their way to manage risks in order to enhance their continuity. The common practice of risk management for property exposure of a firm entails the actions taken at the firm level to manage risks (Marrison, 2002). According to Marrison (2002), risks can be managed through: avoiding risks, minimizing risks, transferring risks, and undertaking change management that raises the firm’s stake in risk management. Risk management measures safeguard the firm’s interests and operations.
Lam, J. (2003). Enterprise Risk Management: From Incentives to Controls. Hoboken. New Jersey: John Wiley and Sons.
Marrison, C. (2002). The Fundamentals of Risk Measurement. New York: McGraw Hill. Read More
Cite this document
  • APA
  • MLA
(“Risk Mangement Research Paper Example | Topics and Well Written Essays - 500 words”, n.d.)
Retrieved from
(Risk Mangement Research Paper Example | Topics and Well Written Essays - 500 Words)
“Risk Mangement Research Paper Example | Topics and Well Written Essays - 500 Words”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document


Visual Thinking Strategies

16 Pages(4000 words)Research Paper


...success. 5. People development – Efficient leaders must promote follower’s growth and provide a platform for them to succeed. This will help to develop future leaders and will eventually lead to the success of the organization as a whole. 6. Risk management – Competent leaders must be innovative and be prepared to take risks and experiment with new methods in order to foster development. They must use new and innovative techniques to solve problems and also adapt to changes. 7. Values and ethics – Good leaders must follow social norms and ethics and set examples for the followers. They must not resort to dishonest means or engage themselves in illegal or unlawful activities. Nowadays, most organizations...
3 Pages(750 words)Essay

Risk Management

...mangement and error reduction in aviation maintenance. London, UK: Ashgate. Prather, C. D., National Research Council (U.S.)., Airport Cooperative Research Program., & United States. (2011). Current airport inspection practices regarding FOD (foreign object debris/damage). Washington, D.C: Transportation Research Board. United States., & National Research Council (U.S.) (1998). Improving the continued airworthiness of civil aircraft: A strategy for the FAA's Aircraft Certification Service. Washington, D.C: National Academy Press. Wittmer, A., Bieger, T., & Mu?ller, R. (2011). Aviation systems: Management of the integrated aviation value chain. Berlin: Springer. Dorfman, M. (2002). Introduction to risk...
6 Pages(1500 words)Coursework

Assignment 2

... System. Califonia: OES FIRESCOPE OCC. Kevin. M. (N.d.). Disaster Management Program. Retrieved from US Forest Service: NETC. (2004). Incident Command System: Introduction and Overview. New York: National Emergency Training Center. Service, T. S. (2010). National Emergency Risk Assessment Guidelines. Hobart: Commonwealth of Australia and each of its states and territories, 2010. UNDP. (2010). Disaster Risk Mangement. New York: UNDP.... ? Risk Management Question Risk is defined as the probability of harmful consequences that result from interactions between human induced or natural hazards including vulnerable conditions. These consequences include...
4 Pages(1000 words)Essay

Financial Mangement

...The American Stock Exchange and the NASDAQ: Similarities and Differences The common traits of the American Stock Exchange and the NASDAQ stem out ofthe fact that they represent two basic types of stock market. Both of them deal with trading of vast variety of securities and play an active role in formation of a firm's stock price. Many of securities can be listed and traded at both the AMEX and the NASDAQ. At both markets an important role in the process of stock trading belongs to professionals - so called specialists at the AMEX and the dealers at the NASDAQ. However, the ways two stock markets operate differ as the AMEX is one of the largest examples of the organized exchanges while the NASDAQ is, by all means, the most... American Stock...
3 Pages(750 words)Essay

Essentials Mangement

...Essentials Management Introduction Management functions, theories and principles are undergoing drastic changes in the current world because of the changing concepts of business under globalization and liberalization. Traditional management theories have given way for new strategies and business concepts. Change is visible in every segment of the business and management at present. For example, as per the traditional belief marketing professionals have undertaken all sorts of tactics in order to get the business. But as per the current methods relationship building is accepted as the core of every business function and even the marketing people may not do anything which will destroy the relationship building process. “Without...
7 Pages(1750 words)Essay

Stratigy mangement

...value to the state of CRM strategies in the organization (Campbell, 2003). These beliefs and assumptions go in line with the findings of Reinartz and Chugh (2003), who are confident that employee empowerment is the necessary precondition for achieving excellence in customer relationship management. For CRM to be successful, the organizational culture must display the features of risk-taking and provide employees with reasonable autonomy and confidence, that employees have freedom to act in the best interests of customers (Reinartz & Chugh, 2003). Obviously, the implementation of CRM in organizations is impossible without making organizations prepared to deal with possible barriers on the way to CRM success, to measure...
10 Pages(2500 words)Essay

Comparative Approaches in Employment Relations

12 Pages(3000 words)Assignment

Illinois Risk Mangement

...Illinois Risk Management School Affiliation: Risk management plays an integral role in any business as it foresees the likely future and helps in preparing for the risks or opportunities. Even though the components of a good risk management program might be uniform for all businesses, the risks and threats faced by various businesses vary. It is likely to find one institution facing a certain risk, which is not a bother to another. Chicago State University and the Government of Illinois share some of the risks faced, but there will still be a variance in both the risks faced and the approach employed. This paper has addressed these similarities as well as the differences. In its findings, it was established that the University has... a...
7 Pages(1750 words)Essay

The Main Subjects of Anthropology

15 Pages(3750 words)Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Research Paper on topic Risk Mangement for FREE!

Contact Us