Risk Management Essay Example | Topics and Well Written Essays - 2000 words - 1

Risk Management - Essay Example This will directly led to the third principle of transparency and inclusion, which means that stakeholders have knowledge of the risks which includes them in the knowledge of the potentials. The fourth principle is that risk assessments are used for the decision making process, which allows for informed decisions. Finally, the principle of using the best possible information also adds value to the assessments, making risk have meaning and purpose when analyzed against the benefits within a decision making process. The following paper will discuss these five principles and their influence on risk management assessments. The Five Most Important Principles of Risk Management 1. Introduction There are a great number of issues that arise when considering managing risk within an organization. The five most important principles of risk management are to address uncertainty explicitly, be tailored to the needs of the organization, promote transparency and inclusion, be a part of the decision making process, and be based on the best available information (Wood 2012, p. 32). Without these five guiding principles, risk management would be difficult and without the value that makes it an essential part of the processes of the organization. ... .if you know neither the enemy or yourself, you will succumb in every battle† (Wood 2012, p. 119). Risk management is the art of creating knowledge of the organization and knowledge of the competing forces in order to win the battle of competition. Risk management defines the organization for its weaknesses and vulnerabilities while also defining the external forces that could cause issues through those weaknesses and vulnerabilities. 2. Addressing Uncertainty Explicitly It is the uncertainty of the future that defines the need for risk management. A good analysis can be done in a short time or could be longitudinal in its process. A good analysis will also have created no specific perspective from which conclusions have been drawn – there is no point of view. Risk is surgically incised, the offending aspect of business is taken out, dissected for its value, and then placed into a treatment plan through which the effect that it might have is mitigated through solutions t hat have been designed towards creating effective decisions (Yoe 2011, p. 95). In order to create an effective identification of the risks that will present themselves, the risk manager must be precise. General risk identification does not provide enough information for the manager to work towards mitigating that risk. Risks must be aggressively and explicitly identified so that they can be addressed through meaningful decision making and action. The identification of risk means that it must be explicit in order to classify the risk so that it may be prioritized. Without knowing exactly how the risk is manifested, the use of that information is not valuable (Whitman 2010, p. 167). A risk manager must be precise