Risk Management Process Identifying The Risk - 1234 Words

There are five steps of the risk management process: identifying the risk, analyzing the risk, evaluate the risk, treat the risk, and monitor or review the risk (â€Å"What Are the 5 Risk Management Process Steps?†). Step one would be to identify the risk. This step involves finding all the possible potential losses. There are some major issues that can cause a risk in risk management, such as, worker compensation, climate change, and increasing cost. A risk manager can use a variety of information to identify the loss exposures, such as, physical inspection, financial statements, and questionnaires. There are a number of important loss exposures that can be identified using a variety of information including: property, liability, business income, human resources, crime, employee benefit, foreign, and intangible loss exposures. (Rejda and McNamara, 46) All of these important loss exposures can help a risk manager to identify and avoid a risk. The second step of the risk management process is to analyze the risk. Once the risks are identified, you can determine the chance and the consequences of different types of risks. It is also important to understand how to manage the risks correctly. The third step of the risk management process is to evaluate or rank the risk. In this step, it requires an estimation to the frequency and severity of loss. Frequency of loss, also sometimes referred to as likelihood, refers to how often a particular unpredictable outcome will happen or isShow MoreRelatedRisk Management1179 Words   |  5 PagesABSTRACT Risk management is an activity, which integrates recognition of risk, risk assessment, developing strategies to manage it, and mitigation of risk using managerial resources. Some traditional risk managements are focused on risks stemming from physical or legal causes. (For example, natural disasters or fires, accidents, death). 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According to Brown, Steen, and Foreman (2009) risk management can be defined as the culture, processes, and structures that are directed towards taking advantage of potential opportunities while managing potential adverse effects† (p.547). To assist companies in the risk management process, companies are incorporating a risk management system, this helps