Risk Management - Overview, Importance - Term Paper Example

Introduction The objective of risk management is to reduce the consequences of any type of risk in an organization or in a country. Risk assessment and management involves use of different tools, criteria with the help of technology or skilled experts in curbing any unplanned losses due to destruction of resources. The nature of risk is two-sided, where it can lead to great losses if not well mitigated and at the same time, if well handled, it can lead to great gains if the risk can be curbed or reduced to manageable level (Faiad & Jason 2012, p. 517). This has led to experts researching on risks that may affect their organizations or their individual lives and develop mechanisms of identifying, predicting and structuring safe ways of mitigating or reducing the impacts and consequences that may arise in case the risk occurs. Summary The analysis done by the team of experts representing the UK Government that documented the report titled the National Risk Register of Civil Emergencies has touched on almost every risk that presently affects or can occur in the next five years in the country. The research has used a number of methodologies including the use of quantitative or qualitative analysis, case study and personal reflections.They have mentionedthe purpose of their research as to enlighten the citizens on the risks that are bound to affect them and has categorised the risks of emergency according to their likelihood of occurrence and the impacts they may cause. They have established the risks, assessed their impacts and developed some local and national preparation strategies for emergency. They have established the main types of civil emergency and documented the highest priority risks. Pandemic influenza has been seen to be the high risk compared to rare earthquakes and tsunamis. A new risk has been identified that never prioritized in 2012, that is wild fires. Natural hazards consist of diseases, flooding, volcanic occurrences, storms, droughts and wildfires.Major accidents that occur during our day to day activities including accidents in industries, contamination or pollution and transport accidents have also been identified. Other malicious crimes like terrorism and cyber attacks have been identified and CONTEST (2011) is still being used to counter terrorism in the country. Identifying risks has notalways been done well due to the difficulty in identifying risks because of their uncertainty (Kevin et al 2012, p. 245), but the researchers have better schemes to identify the risks which in turn give them an upper hand in dealing with them. They have constantly establishing proper procedures and strategies of identifying the risks to make it easy and less scary in managing them. This is well done by a number of teams of experienced members rather than being identified by an individual team. This therefore helps themutilize other people’s studies and experiences and at the same time, it also calls for techniques like brainstorming which have proved to produce better research outcomes. All in all, this effort put in by the government, as documented in the National Risk Report has effectively resulted to the reduction of risks thus mitigating their impacts to the society at large. One of their key arguments is that most priority risks are unchanged since the year 2012. Also, they have identified new risk being wild fires and have categorized risks like tsunamis and earthquakes as rare occurrences. Weaknesses Dealing with a large scope has led to the team not analysing each risk to the required standards. For instance, the risk assessing tool that has been used to evaluate Anti money laundering have been deduced by people’s assumptions and opinions rather than factual data to explain the risk matrix. In addition, the report was not detailed so as to explain the responsibilities of the public and the organizations and how they can prepare so as not to be advantaged in case they find themselves cornered. Instead, it provides a link for the citizens to log in and familiarise themselves. Inasmuch as the police force has been seen to try and comply with the Act set by the government by getting the risk assessment report completed on time, there are some bits of information that they would have waited for in order to publish a full, well analysed and complete report that would satisfy the citizens. The report has talked of producing future reports with more information explaining the risks that have been researched on. This is evident in the shallow analysis of Anti money laundering and financing terrorism in the country. Strengths It has explained the risks that can affect the members of citizens. At the same time, it has explained how the government carries out an annual risk evaluation of civil emergencies. This is true with risks because they may happen anytime. Therefore proper preparation involves updating the information obtained as frequently. This shows up in the first page of the National Risk Register where the researchers identify that the government has been producing the document since the year 2008 with updated information so as to help anyone or any organization that would want to position themselves well in handling any risk that may come their way. Also, use of website and other internet links as directed by the researchers proves that the risks are being looked into so as to continually identify and provide the best and safest ways of curbing or reducing the impacts of any risk in case it occurs. The report has documented a set of procedures (Yusuf, Christopher & Ulrike 2008, p. 285), including the risk matrix they used as postulated by the researchers in page 10 of the National Risk Register. Although it states that more information about particular issues shall be produced in future reports, this openly shows that their risk management criterion is an ongoing process being updated time after time, which is a good trait of a risk management model.Their risk matrix shows planning for the risk. This is seen where the relative plausibility of its occurrence in the next five years is put on the horizontal axis. The model also identifies and assesses the risk as shown in the different column. It then qualifies and quantifies the risks as seen on the axes denoting their consequences and likelihood of occurrence. On the other hand, it has stipulated strategies to mitigate these risks starting with the most adverse risks. They have thenexplained how they evaluated and tested the risks before incorporating them in the matrix. The matrix then helps to track and control the risks as seen in the reports from 2009, proving that it has documented and archived the risk history for data and future references. Qualifying risks involves three subcomponents: filtering a risk and finding out if it can occur, finding the probability of its occurrence and prioritizing for the risk (Nicholas, Mark & Chitru 2010, p. 5). The NRA analysis has explained in page two how they identified and qualified the risk probability and impact in terms of low,medium low, or high or medium high. This is useful as it helps to determine which risk can be dealt with first depending with its consequences. Also, it helps the citizens and other stakeholders to identify the risks at a glance and evaluate them. The risks are shown in order of theiroccurrences whereby the pandemic influenza and disruptive industrial actionamong other natural risks like storms and gales have been classified as having the highest probability in its occurrence by affecting one person out of 2,000 to 20,000 people. By collaborating with other bodies such as the Natural Security Risk Assessment, they have determined in the first step the country’s risk tolerance thus put more emphasis in dealing with the high risks. This is evident in page two where the NRA has listed 80 types of events that are considered as civil emergency but at the same time filtering them to 40. The other half has been reserved and kept under review as their occurrence may come up in future.They then assessed the impacts of these risks and their probability of occurrence after which they prioritized which risks were going to be dealt with and them that would be dealt with later on. In their quantitative risk assessment, they analysed hazards which potentially seem to be associated with larger consequences (Faiad & Jason 2012, p. 515). Catastrophic terrorist attacks and the pandemic influenza followed by coastal flooding and volcanic eruptions have been ranked whose impacts have the highest magnitude of 5 and 4. Terrorist attacks have been identified as a risk that can occur anywhere at any time. Disruptive industrial actions and malicious cyber attacks are considered to have the least relative impact thus tagged with 1 as the minimum score on the matrix table. They came up with ways of reducing the overall level of risk. Though risks are calculated through probabilities (Gregg 2012, p. 88), the team explained some risks that they considered not likely to happen and explained why. For instance, asteroid strikes from the sky, plant diseases that may end up harming peopleafter consuming the affected plant products are said to have the least probability of occurrences even in future (Robert C. 2004, p. 508). Other risks that are bound to happen but do not affect UK directly have also been left out, as recorded in page 3 of the report. The team has also done risk planning where they have budgeted for the resources available and sought the expertise required in drafting the procedures and criteria to be followed in risk management (Alan 2002, p. 90). For instance, in page 11, the report explains the pandemics that have ever affected the world at large, including the UK. Some arose from other countries but spread to the UK, for example, the most recent avian flu that emerged from Asia. They therefore state that there is a possibility of another pandemic arising, from within or even from without the UK due to the rate at which people are travelling to other countries for education, jobs or social activities. To curb this possibility, the government has been stated to have collaborated with international partners to help prevent, detect and research on any probable pandemic that may later on affect their country. Planning is very important as far as risk management is concerned. Developing and implementing risk management strategies helps lessen the impact and consequences of some risks (Bai, Ramayya, Rema & Harry 2013, p.736). As it has been recorded in page 17,to avoid damages caused by floods, the Scottish Environment protection Agency has developed sophisticated systems to forecast and monitor floods.Automated flood warnings sent to the citizens are successful strategies that have been put in place to avoid this risk. Risk response strategies can also be structured to alert the citizens in case of volcanic eruptions or of any danger ahead. This has helped tomonitor if a risk can occur and if it occurs, it can be dealt with effectively and efficiently. Tracking risk response helps determine if a plan is feasible and working and allows modification or change of strategy and this has been seen to be dealt with by constantly improving and updating the strategies embraced. In controlling risks, contingency planning can be used which calls for setting apart resources such as money and time to control identifiable risks (Michael & Edward 2007, p. 5). This has been embraced well. For instance, in controlling cybercrime, the 2010 Strategic Defence and security review set apart $650 million to help curb the vice of cyber crime.Also, such allocations of money have been used to train people on safety issues. Documenting and archiving risks help to provide future information about the risk (Tim 2012, p. 571). It may outline its resolution and consequences. Having in place the records of the risks that have ever occurred, their impacts and their solutions can also boost their preparedness. Technical failures like the loss of electricity or breaking of sewage pipes that ended up spreading up to 7km have been noted and the government has been seen to devolve industries or emergency responders to deal with such cases. Conclusion In conclusion, I affirm that the methodology used by the team that developed thisNational Risk Register of Civil Emergencies was valid and reliable. They have explained the issue of risk in a simple manner that is easily understood by any citizen and they have considered some theoretical and practical matters concerning risk management. It has covered almost every risk that is bound to happen in the UK. Tendency of biasness has been reduced by coordinating with other local and international bodies in gathering information. The matrix that was used in the assessment was also reliable. References Alan M. E. (2002) Quality Assurance and Risk Management in On-line Medical Discussion Groups . American Journal of Medical Quality, 17, pp. 89 - 93. Bai, X., Ramayya K., Rema P. and Harry J. W. (2013) On Risk Management with Information Flows in Business Processes. Information Systems Research, 24, pp.731 - 749. Faiad R., and Jason M. U. (2012) COMMENTARY: The Reliability-Quality Relationship for Quality Systems and Quality Risk Management. PDA J. Pharm. Sci. Technol., 66, pp. 512 -517. Gabe M., Sandra W. and Hazel K. (2013) Decentralizing risk: The role of the voluntary and community sector in the management of offenders. JCriminology and Criminal Justice, 13, pp. 363 - 379. Gregg C. H. (2012) Probability Concepts in Quality Risk Management. PDA J. Pharm. Sci. Technol., 66, pp. 78 - 89. Jeffrey J. R. and Michael J. L. (2000) Downside Risk Implications of Multinationality and International Joint Ventures. AMJ, 43, pp. 203 - 214. Kevin O., Anne G., Michael Z., and Nuala C. (2012) Quality Risk Management: Putting GMP Controls First. PDA J. Pharm. Sci. Technol.,66, pp. 243 - 261. MacKay J. A. (1996) Risk management in international petroleum ventures; ideas from a Hedberg conferenceAAPG Bulletin,80, pp. 1845 - 1849. Michael B. E. and Edward M. K. (2007) PERSPECTIVES:Risk Management and Intrusions on Medical Practice: Striking A Balance. Health Aff.26, pp. 678 - 680. Nicholas N. B, Mark P. S and Chitru S. F. (2010) ENVIRONMENTAL RISK MANAGEMENT AND COST OF CAPITAL: AN INTERNATIONAL PERSPECTIVE. AMPROC, 2010, pp. 1 - 6. Robert C. (2004) Risk Ritual and the Management of Control and Anxiety in Medical Culture. Health (London), 8, pp. 505 - 528. Simon S. G., Ming C. S. and Jane Z. (2013) Risk management capability building in SMEs: A social capital perspective. International Small Business Journal, 31, pp. 677 - 700. Tim S. (2012) Application of Quality Risk Management To Set Viable Environmental Monitoring Frequencies in Biotechnology Processing and Support Areas. PDA.J.Pharm.Sci. Technol., 66, pp. 560 - 579. Xiaole W., Panos K., and Hirofumi M. (2013) Horizontal Capacity Coordination for Risk Management and Flexibility: Pay Ex Ante or Commit a Fraction of Ex Post Demand? MSOM, 15, pp. 458 – 472 Yusuf J., Christopher M. and Ulrike U. (2008) Hypo International Strengthens Risk Management with a Large-Scale, Secure Spreadsheet-Management Framework Interfaces, 38, pp. 281 - 288. Read More