| Every business carries an element of
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| | income. This helps promote growth through
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| risk. Therefore, managing risks is
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| | profit, continuous operation and stable
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| crucial process in many organizations.
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| | earnings.The function of risk management
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| Depending on the business, steps can be
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| | is to organize and carry out a plan to
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| taken to reduce the frequency and
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| | control or reduce the risks to which a
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| intensity of risk. Risk management is a
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| | firm is exposed. This planning involves a
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| process or group in an organization that
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| | five-step process. The first step is to
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| takes management action to reduce risk.
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| | identify potential risks. The method of
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| This activity involves the process of
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| | identifying risks may depend on the
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| measuring and developing strategies to
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| | organizational culture, industry practice
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| manage the risk. The strategies employed
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| | and compliance. Once risks have been
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| include transferring the risk to another
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| | identified, the next step is to assess
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| party, avoiding the risk, reducing the
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| | the potential severity of loss and
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| negative effect of risk, and accepting
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| | probability of occurrence. The third step
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| some or all of the consequences of a
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| | is to find a potential treatment for the
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| particular risk.There are two kinds of
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| | problem. This may involve the transfer,
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| risk management. Traditional risk
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| | avoidance, reduction or retention of a
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| management is focused on risks stemming
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| | potential risk. Next is to implement the
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| from physical and legal causes like
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| | plan by choosing the right method of
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| natural disasters, accidents, death or
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| | treatment. Prior to implementation, a
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| lawsuits. Financial risk management
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| | review and evaluation of the plan is
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| focuses on risks that can be managed by
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| | necessary.Initial risk management plans
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| using traded financial instruments. Large
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| | are never perfect. Practice, experience
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| corporations employ risk management teams
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| | and actual results, will necessitate
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| while smaller corporations practice
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| | changes in the plan. Therefore, the plan
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| informal, if not formal, risk management
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| | should make room for flexibility in
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| techniques that are rolled into the
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| | decision making. Risk management is
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| responsibilities of operational managers.
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| | considered an art in management circles
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| Risk managers recognize and review their
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| | and experience and exposure to situations
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| organizations loss exposures including
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| | helps mastering this art.
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| property, liability, personnel and net
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