The Risk Management is one of the most important tools that any organization use to project the future path or look for another approach to reach their goals or services. The Risk Management is the way to identify a problem, study all the variables and fix the problem of any activity or project. Based on this statement, an organization can improve their performance and reach their goals making sure that the risk is “under control” and managing the inconveniences to have a better outcome.
Many industries and government bodies have expanded regulatory compliance rules that scrutinize companies risk management plans. Create new policies, methods or procedures. In an increasing number of industries, boards of directors or managers are required to review on the adequacy of enterprise risk management processes. As a result, risk analysis, Audits and other studies are implemented to improve and also use as a tool of risk strategy. (Rouse, 2018)
The risk analysis can be process by these steps:
• Identifying the risk: This is important during Risk management. Identifying the problem and what else can happen with this problem.
• Analyze the risk: After finding the problem. Study all the possibilities and circumstances to fix the issue.
• Develop a plan: After analyzing the risk. It is very important to study the advantages and disadvantages of that specific plan.
• Implement the plan: The main goal is try to eliminated the threat. The only way to success is implementing the new plan and make sure that the plan is optimizing the performance.
• Monitor the plan: After implementing the plan. It is very important to follow- up closely to verify that the changes work.
There are two types of management risk. Quantitative and qualitative. Qualitative risk is based on the qualities and the impact that could have on a company or organization. The risk is categorized in three different levels: Low, medium, High. One the other hand, the quantitative risk is based on the financial amount. It represents the cost of the organization. The main goal of a quantitative risk analysis is to associate a specific financial amount to each risk that has been identified, representing the potential cost to an organization if that risk actually happens.