Question

The task of risk identification can be horrendous if the risk management system has no memory. Discuss the important elements of a risk management system that would compensate for a lack of memory by the organization.

Answer 1

Answer:

Risk Likelihood & Cost of Solutions

Explanation:

Risk Management is the process of identifying, analyzing and responding to risk factors throughout the life of a project and in the best interests of its objectives. Proper risk management implies control of possible future events and is proactive rather than reactive.

ELEMENTS OF RISK MANAGEMENT SYSTEM THAT WOULD COMPENSATE FOR A LACK OF MEMORY

Risk Likelihood & Impact: This is the part of your risk assessment where you’ll rate the probability and its impact. Your Annual Loss Expectancy is obtained by multiplying your Single Loss Expectancy (what it will cost) by your Annual Rate of Occurrence (how often it will happen).

Cost of Solutions – Now is your chance to justify your budget with finance. If the cost of the solution far outweighs the likelihood of an event, then there’s no justification.

Answer 2

Answer:

The important elements of a risk management system that would compensate for a lack of memory by the organization is Asset identification, Risk Analysis, Risk likelihood & impact, and Cost of Solutions.

Explanation:

Risk management is the process of identifying, assessing and controlling threats to an organization's capital and earnings. These threats, or risks, could stem from a wide variety of sources, including financial uncertainty, legal liabilities, strategic management errors, accidents and natural disasters.

A risk management system is the way through which an organization manages players, roles, relations and processes of its business in order to achieve its values and objectives.

In the case of lack of memory, the following elements can compensate:

• Asset identification: review the lists of possible risk sources as well as the project team’s experiences and knowledge, all potential risks are identified.
• Risk Analysis: Categorize identified risks and prioritize. The number of risks identified usually exceeds the time capacity of the project team to analyze and develop contingencies. The process of prioritization helps them to manage those risks that have both a high impact and a high probability of occurrence.
• Risk likelihood & impact check: Effect of the risk in case it is already being experienced should be measured. Possible remedies to manage the risk or possibly, prevent the risk from occurring should be put in place.
• Cost of Solutions and contingency plan: Convert into actionable tasks, those ideas that were identified to reduce or eliminate risk likelihood and set aside a budget for it.