The Importance of Risk Management

How do we buffer ourselves from life’s uncertainties? Nobody can cheat death, but we do take precautions to protect ourselves and our loved ones.  This is true even in businesses as we have so well seen during the economic meltdown that occurred in the past years. Giant organizations crumbled, going from being among the most respected to the most busted. The burst in the economic bubble forever changed how organizations view and handle risk. Companies have a renewed focus on their risk management strategies so that they can identify risks before they become lethal and protect their business interests without going under.

Any organization is prone to five basic risks. These are development, manufacturing, sales and marketing, profit and loss, and future growth risk. While organizations of any size need to have an effective strategy in place, it is more important if a business has multiple operation sites, has operations overseas, has many suppliers or subcontractors, has several processes, or is a conglomerate.

Such organizations can face threat from internal or external sources. Internal risks arise as a consequence of the business itself and hence can be predicted and mitigated. These could arise due to personnel problems, technology issues, or physical factors.

External factors are more difficult to predict and hence to mitigate. These could arise due to an unpredictable economy, unstable politics, or natural calamities.

Understanding the types of risk is the first step towards mitigating them.  Once that is done, organizations should work towards eliminating or avoiding the risk. For this they need to have a transparent risk management strategy that is approved by all the stakeholders, is inclusive, and has the tools to handle threats and convert them into potential opportunities that will benefit the business.

But these days, there is also a new kind of threat emerging. With the internet blurring the personal and social lines, companies have to protect themselves and their customers’ sensitive data from internet breach and privacy violations.

New age risks require new age mitigation policies, and organizations that want to survive into the next generation must be able to implement these.

How do we buffer ourselves from life’s uncertainties? Nobody can cheat death, but we do take precautions to protect ourselves and our loved ones.  This is true even in businesses as we have so well seen during the economic meltdown that occurred in the past years. Giant organizations crumbled, going from being among the most respected to the most busted. The burst in the economic bubble forever changed how organizations view and handle risk. Companies have a renewed focus on their risk management strategies so that they can identify risks before they become lethal and protect their business interests without going under.

Any organization is prone to five basic risks. These are development, manufacturing, sales and marketing, profit and loss, and future growth risk. While organizations of any size need to have an effective strategy in place, it is more important if a business has multiple operation sites, has operations overseas, has many suppliers or subcontractors, has several processes, or is a conglomerate.

Such organizations can face threat from internal or external sources. Internal risks arise as a consequence of the business itself and hence can be predicted and mitigated. These could arise due to personnel problems, technology issues, or physical factors.

External factors are more difficult to predict and hence to mitigate. These could arise due to an unpredictable economy, unstable politics, or natural calamities.

Understanding the types of risk is the first step towards mitigating them.  Once that is done, organizations should work towards eliminating or avoiding the risk. For this they need to have a transparent risk management strategy that is approved by all the stakeholders, is inclusive, and has the tools to handle threats and convert them into potential opportunities that will benefit the business.

But these days, there is also a new kind of threat emerging. With the internet blurring the personal and social lines, companies have to protect themselves and their customers’ sensitive data from internet breach and privacy violations.

New age risks require new age mitigation policies, and organizations that want to survive into the next generation must be able to implement these.

Top Cities where KnowledgeHut Conduct Project Management Certification Training Course Online

Project Management Courses in London	Project Management Courses in Singapore
Project Management Courses in Melbourne	Project Management Courses in Toronto
Project Management Courses in Sydney	Project Management Courses in Perth
Project Management Courses in Bangalore	Project Management Courses in Dubai
Project Management Courses in Mumbai	Project Management Courses in Brisbane

Our PRINCE2 Practitioner exam prep course is designed to help you achieve success in project management. With expert guidance and comprehensive study materials, you'll be fully prepared to ace the exam and take your career to new heights. Enroll today and become a certified PRINCE2 Practitioner.