Managing Risks – What you Need to Know

Risk management is often associated with health and safety, workplace injury, accident prevention, and hazard mitigation. It can be defined
as the process of identifying, analyzing and responding to risk factors throughout a project. Effective risk management involves the control of possible future events,
and adopting a proactive rather than reactive approach. The purpose of risk management is to do the following:

  • Identify possible risks
  • Reduce or allocate risks
  • Provide a rational basis for better decision making in regards to all risks
  • Plan future risk mitigation
To manage and respond to risks effectively, and prevent them from becoming future hazards, risk management systems are implemented. Risk management systems are
designed to identify and quantify risks, and predict their impact on current and future projects. As with other management systems, risk management is a continuous process.
Actively responding to risks commonly involves:

  • Eliminating a specific threat, usually by eliminating the cause
  • Reducing the expected costs of a risk event by reducing the probability of occurrence
  • Accepting the consequences by developing a contingency plan, should the risk occur
Assessing and managing risks is the best strategy managers have against possible project obstacles. By evaluating response plans for potential problems and developing
strategies to address them, projects will be easier to manage. To implement a risk analysis process means to develop a problem-solving framework, to outline risks of different
levels and prioritized; which should be managed first. A risk analysis process involves four key stages:

  • Identifying the risk
  • Assessing the risk
  • Developing responses to the risk
  • Developing a contingency plan
Managing risks starts with a proactive approach to identifying potential risks and future hazards associated with the various opportunities projects bring. It is important to
remember that effective risk management initiatives are carried out continuously throughout projects, and are not sporadic undertaking. This enables managers to stay ahead of
foreseeable obstacles and risks. It is important to remember that if risks are not actively attacked, they will attack the efficiency of projects.

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