RISK MANAGEMENT 4
When an organization is aware of the possible risks, types, and steps in management, it is
crucial as well to have adequate information about the management techniques. In one way or
the other, various reasons make it impossible to deal with risks by using a single mechanism. As
a result, it is essential to understand how different strategies work and how they apply to
situations. Risk avoidance is a proven approach; here, the managers put the necessary measures
in place to ensure that the projected risk does not occur. More so, separation of risk is another
reliable method. In its application, there is no location of the valuable business possessions in
one place. As Mikes (2011) observes, diversification is also useful since different product or
service lines can support each other in times of crises.
The critical importance of risk management is that an organization remains aware of the
potential risks and puts in place effective intervention strategies. As a result, the extent of
damage significantly declines in case an eventuality takes place. Without risk management, there
is no doubt that organizations can find it hard to strategize for the future. The business plan will
be incomplete as it omits an essential part of the inclusion. The process is elemental for any
business and guarantees it a continuous success. Above all, it is a move towards a cost-effective
and proactive response to threats.
All in all, it is evident that risk management is an elemental part of the fundamental
business processes that require prioritization at all times. As detailed above, the process entails
not only being aware of how the business scenario is likely to change but also having the
adequate risk mitigation strategies in case there is an occurrence of any danger. Considering that
situations change and objectives vary, it is apparent that there is no standard way of risk
management. Strategies will always be specific to the situation with risk avoidance,
diversification, and separation mechanisms being the commonly used.