| Management of risk in an organization | | | | the risk faced by them. Generally they study the |
| | | | | occurrence of the situation and evaluate its impact |
| | | | | on them. |
| Abstract : | | | | Another method is conducting a continuous survey |
| | | | | within the organization. Such survey includes |
| In this article I am going to deal with what is risk, and | | | | predetermine guidelines and if such guidelines are |
| how to manage risk. I will be focusing on what is a | | | | breached then one can easily identify the risk and at |
| legal risk and what is the process or the procedure | | | | the same time risk can be evaluated. |
| to identify the risk and mitigating the risk. For the | | | | |
| ease of the reader the process of risk management | | | | Avoidance of Risk |
| is been divided into following parts | | | | |
| 1. Identification of risk | | | | It is very important to identify the risk and also to |
| 2. Evaluation of risk | | | | evaluate the risk but at the same time one needs to |
| 3. Avoidance of risk | | | | avoid such risk after identifying it. Avoidance of risk |
| 4. Transfer of risk | | | | includes either not engaging in the activity in which |
| 5. Mitigating of risk | | | | risk has been identified OR removing or reducing such |
| 6. Management of risk. | | | | risk drastically. Avoidance may also lead to reduction |
| | | | | in profit because if I don’t take risk then at the |
| | | | | same time I reduce my chances for getting profit |
| Definition of risk: | | | | out of it. |
| | | | | |
| Oxford Dictionary defines the term “risk” as | | | | Transfer of Risk |
| a chance or possibility of danger, loss, injury or other | | | | |
| adverse consequences. | | | | Transfer of risk can also be included as one of the |
| | | | | way to avoid risk. Generally transfer of risk can be |
| In legal term “risk” denotes peril, hazard or | | | | done by entering into an insurance contract over the |
| chance of loss. Therefore, etymologically or legally | | | | subject matter in which I have identified considerable |
| what we refer to risk is the chance of confronting a | | | | amount of risk. It is important to understand that |
| situation in which one has to suffer loss or injury. | | | | insurance is done to reduce the possibility of the |
| | | | | harm or loss occurred to the organization which is of |
| Legal risk is defined as risk which can be legally | | | | considerable amount. If risk amount is negligible then |
| identified and which can be mitigate or manage legally. | | | | it will be better for the organization to retain such |
| Similarly we can also say risk which can be reduce by | | | | risk. |
| the word legal or risk which can be limited by the | | | | |
| word legal. Hence forth legal risk is the subset of risk. | | | | Mitigation of Risk |
| | | | | |
| Example of legal risk in an organization: | | | | “Prevention is better then cure” ,A very old |
| | | | | saying is followed by the organization. By following |
| The possibility that contractual rights will be void or | | | | certain prevention method or guidelines, the |
| unenforceable because of: illegality(void ab-initio); a | | | | organization tries to reduce the amount of risk or |
| technical defect (eg: stamp duty not paid); lack of | | | | mitigate the risk. |
| capacity (eg: unsound mind). | | | | Such guidelines: firstly, studies the legal compliance of |
| | | | | the subject matter. |
| Process/Procedure: | | | | Secondly , after studying if non compliance is found |
| | | | | then to fulfill required compliances. |
| Identification of risk. | | | | |
| | | | | For mitigation of risk it is very important to |
| It is the first and foremost step in the process of | | | | measure the risk, and then only one can take |
| management of risk in the organization. Identification | | | | preventive measure. |
| can be done by studying the problem itself or | | | | |
| studying the nature of the problem. Identification can | | | | Management of risk |
| also be done by facing the circumstances or by | | | | |
| observing the change in particular pattern of the | | | | Management of risk is done by following the above |
| subject matter. | | | | sated steps in particular series and afterwards |
| It depends upon the nature of the problem and | | | | categorizes those risks in to degrees. Degrees can |
| also the nature of one’s understanding the | | | | vary from high risk , medium risk and low risk. After |
| problem, which may defer from person to person. | | | | categorizing them a priority process should be |
| | | | | followed in dealing with risk, that is, the risk which is |
| Evaluation of Risk | | | | of high degree should be taken first and risk with low |
| | | | | degree should be taken later. |
| Organizations follow a particular process in evaluating | | | | |