Risk Management

Types of risk management

There are several types of risk management due to the wide range of potential risks affecting the workplace, which must be taken into consideration, and an appropriate risk management plan must be implemented in the company, including ³

Health and Safety Risks: This type allows the identification of the types of risks that can occur, such as physical, chemical, and biological risks, and the risk assessment with appropriate control measures in place to ensure that employees feel physically and mentally cared for and that public safety is ensured.

Reputation risk: The most important thing that companies may have is a good reputation with investors, employees, and customers, as the decisions made by the organization and the incidents in which it is responsible can create a negative image that affects the brand, so you must understand the threats to reputation and know how to manage them.

Compliance risks: There is a set of laws, policies, regulations, and practices that guarantee ethical business practices in government agencies, and these obligations must be complied with, because if they are not adhered to, this will have financial and legal implications, which poses risks to achieving business goals.

Operational risks: are the risks of loss resulting from the failure of internal processes, systems, or external events, such as the failure of global crises, information technology systems, fraud, loss of people, and litigation, so organizations must know the systems that manage these risks.

Strategic risks: Managing the strategic objectives of organizations is the basis for success, progress, and growth in the future. Strategic risks occur as a result of external causes or circumstances that are serious, to the point of changing the strategic direction of the business, which affects the success or failure of the organization in the future.

Financial risk: Financial risk refers to the flow of money in and out of a business with sudden financial loss, and most types of risks have financial consequences, such as additional financial costs, or lost revenue, so the goals of any organization cannot be achieved without sound financial management.

The importance of risk management

  The importance of risk management can be summarized in the following points: ¹, ²

§  Risk management enables the company to use the necessary tools that help it identify potential risks appropriately, deal with them, and mitigate them. Risk management also provides businesses with the foundations on which sound decisions can be made, and risks can be assessed and managed to prepare for the possibilities that may face the path to progress and growth.

§  Risk management is now more important than it was previously, as the risks that modern organizations face are more complex, driven by the rapid pace of globalization, and new risks appear every day and constantly, and are often linked to the currently widespread use of digital technology.

 References:

   1.  Linda Tucci, "What is risk management and why is it important?", search compliance, Retrieved 15/1/2022. Edited.

    2.  "Risk Management", corporate finance institute, Retrieved 15/1/2022. Edited.

 3.  Riskology (8/9/2021), "6 Types of Risks to Be Managed with Enterprise Risk Intelligence Software", riskware, Retrieved 16/1/2022. Edited.