IntroductionRisk management is defined as the process of identifying, assessing and prioritizing risks to maximize realized opportunities. Effective management of the risks involves a coordinated and economic use of resources to monitor, control and minimize the likelihood and impact of unforeseeable unfortunate events. Uncertainty associated with such sectors as the financial markets, liabilities of legal nature and failures in project management are potential causes of risks. Other scenarios include natural disasters, accidents, credit risk and enemy attacks (Crockford, 1986). Risk management adopts a prioritization criterion whereby the highest likely occurring risks and risks likely to result in the greatest loss are prioritized first.
Minimum loss and lower probability risks are then handle in the descending order. Such a criterion is however, not available for projects; and instead a random identification and analysis is used. Because of the occurrence of unplanned, unlikely results, the random, brainstorming fashion of assessment often becomes fatal for the success of the project. As a result, there is need for emergency measure to take care of the unexpected risks resulting from lack of organized planning and measurement. Very early in the preparation and planning stage, it is essential that potential risks are identified, categorized and evaluated rather than looking at each risk independently and randomly.
It is much more effective to identify risks and then group them into categories, or, to draw up a list of categories and then to identify potential risks within each category. Consequently, it becomes possible to identify and agree upon universal factors, influences, causes and potential impacts as well as possible corrective and preventative measures (Martin & McClur, 1983). The process of categorizing risks allows for systematic identification of risks and soliciting for information, awareness and possible actions.
Although each project has a unique structure and differs from other projects, certain categories remain constant for different projects. In the risk management plan, it is vital to document potential actions and related risks in the project progress. In order for lessons to be learned and improved for application in future projects, pertinent details of the actions taken and their outcomes should be recorded and reviewed during the review and closure stages (Lacity & Willcocks, 1998).
During the risk management process, implementation of practical of strategies, procedures, and planning, occurs at the project and operational level of the program. Similarly, risk procedures are also applicable at the project and operational levels. The risk management program is faced by a number of challenges. The five-step model of risk management The risk management process is vital in protecting the employees, the business, and in complying with the legal requirements of the regulators. The focus in the most likely occurring risks in the organization allows the risk manager to analyse the risks that are potential harm to the business.
In order to carefully examine what could cause harm in the workplace, and decide whether enough precautions have been taken to prevent harm, certain steps should be followed in the risk assessment process. First, the hazards should be identified by establishing the areas that are most harmed by walking around, asking employees, consulting professionals, referring to ill-health and accident records, and considering the long term effects of hazards to health. Secondly, a decision should be made on the most likely harmed in order for the appropriate risk management strategy to be identified.
The third step of evaluating the risks and deciding on the precautions to be taken, is acknowledged by law that everything ‘reasonably practicable’ to prevent harming people (Martin & McClure, 1983). Fourth, the results of the risk assessment should be recorded and the implementation phase commenced. Communication across the workforce of the results and the likely avenues to be adopted will motivate participation by the company staff as a unit. Finally, the risk assessment initiative should be reviewed and necessary update undertaken.