The Administration or Risk Management is recognized as an integral part of good management practices. It is an iterative process that consists of steps, which, when executed in sequence, enable continuous improvement in the decision-making process.
Risk management is a term applied to a logical and systematic method of establishing the context, identifying, analyzing, evaluating, treating, monitoring and communicating the risks associated with an activity, function or process in a way that allows organizations to minimize losses. and maximize opportunities.
Risk management is both identifying opportunities and avoiding or mitigating losses. It can be applied to all stages of the life of an activity, function, project, product or asset.
Modern risk analysis relates risks to the strategic planning process, which is usually linked to determining the company's vision, mission, and main objectives.
Risk management in the past was mainly oriented towards the purchase of insurance to cover possible losses. Globally, risks are moving towards more comprehensive, comprehensive and consistent management. Comprehensive Risk Management is a process of analysis of all risk exposures that a company faces and the development of business strategies to deal with them.
Risk management is an integral part of the management process. It is a multifaceted process of appropriate aspects of which are often carried out by a multidisciplinary team. It is an iterative process of continuous improvement.
Main elements
The main elements of the risk management process are the following:
- Establish the context: Establish the strategic, organizational and risk management context in which the rest of the process will take place. Criteria against which risks will be assessed should be established and the structure of the analysis defined. Identify risks: Identify what, why and how things can arise as a basis for further analysis. Analyze risks: Determine existing controls and analyze risks in terms of consequences and probabilities in the context of those controls. The analysis should consider the range of potential consequences and how likely those consequences are to occur. Consequences and probabilities can be combined to produce an estimated level of risk. Assess risks: Compare estimated levels of risks against pre-established criteria. This enables risks to be ordered to identify management priorities. If the established risk levels are low, the risks could fall into an acceptable category and treatment would not be required. Treat risks: Accept and monitor low priority risks. For other risks, develop and implement a specific management plan that includes funding considerations. Monitor and review: Monitor and review the performance of the risk management system and any changes that could affect it. Communicate and consult: Communicate and consult with internal and external stakeholders as appropriate at each stage of the risk management process and concerning the process as a whole. Risk management can be applied in an organization at many levels. It can be applied at a strategic level and at an operational level. It can be applied to specific projects, to assist with specific decisions or to manage specific recognized risk areas.
Risk management is an iterative process that can contribute to organizational improvement. With each cycle, the risk criteria can be strengthened to progressively achieve better levels of risk management.
Adequate records should be kept for each stage of the process, sufficient to satisfy an independent audit.
