RISK MANAGEMENT

Risk Management is the identification, assessment, and prioritization of Risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events. Risks can come from uncertainty in financial markets, project failures, legal liabilities, credit risk, accidents, natural causes and disasters as well as deliberate attacks from an adversary. The strategies to manage risk include transferring the risk to another party, avoiding the risk, reducing the negative effect of the risk, and accepting some or all of the consequences of a particular risk.

Principles of Risk Management

The International Organization for Standardization- ISO 31000 "Risk management -- Principles and guidelines on implementation” identifies the following principles of risk management:

• create value.
• be an integral part of organizational processes.
• be part of decision making.
• explicitly address uncertainty.
• be systematic and structured.
• be based on the best available information.
• be tailored.
• take into account human factors.
• be transparent and inclusive.
• be dynamic, iterative and responsive to change.
• be capable of continual improvement and enhancement.

Financial risk management

Financial risk management is the practice of creating economic value in an enterprise by using financial instruments to manage exposure to risk, particularly credit risk and market risk. Other types include Foreign exchange, Shape, Volatility, Sector, Liquidity, Inflation risks, etc. Financial risk management requires identifying its sources, measuring it, and plan to address them. Financial risk management can be qualitative and quantitative. As a specialization of risk management, financial risk management focuses on when and how to hedge using financial instruments to manage costly exposures to risk.

Enterprise Risk Management

Enterprise risk may be defined as a possible event or circumstance that can have negative influences on the enterprise in question. Its impact can be on the very existence, the resources, human and capital, the products and services, or the customers of the enterprise, as well as external impacts on society, markets, or the environment. In a financial institution risk is normally seen as the combination of credit risk, interest rate risk or asset liability management, market risk, and operational risk.

Enterprise risk management (ERM) in business includes the methods and processes used by organizations to manage risks and seize opportunities related to the achievement of their objectives. ERM involves identifying particular events or circumstances relevant to the organization's objectives (risks and opportunities), assessing them in terms of likelihood and magnitude of impact, determining a response strategy, and monitoring progress. By identifying and proactively addressing risks and opportunities, business enterprises protect and create value for their stakeholders, including owners, employees, customers, regulators, and society overall. ERM can also be described as a risk-based approach to managing an enterprise, integrating concepts of strategic planning, operations management, and internal control. ERM is evolving to address the needs of various stakeholders, who like to understand the broad spectrum of risks facing complex organizations to ensure they are efficiently managed.

Risk Analysis
Risk analysis is the process of systematically identifying and assessing the potential threats and uncertainties that occur when trying to achieve a certain goal (such as completing a project), and then finding a reasonable strategy for most efficiently controlling these risks. This technique also helps to analyze the related vulnerabilities of a project to these threats.
Risk analysis also helps to define preventive measures to reduce the probability of these factors from occurring and identify countermeasures to successfully deal with these constraints when they develop to avert possible negative effects on the competitiveness of the Enterprise.

Risk Management has to be seen as an integral part of Project Management which includes planning, organizing, and managing resources to bring about the successful completion of specific project goals and objectives. I have placed this blog with a view to share the information collected from various sources. The measures to overcome the risk or the management of the risk is obvious as the solutions evolve from mostly the analysis of the Risks. I would request the network people to read this place their views.