Risk and Reward Assessment Paper Example

Organizations face different forms of risks in their daily operations, even at times organizations take risks that they never realize or spot because it is not easy to avoid risks. Risks are uncertain state or circumstances that have effect on at least one objective of the project. Risks can either be technological, social, economic, legal or political (MindTool.com, n.d). Firm or project managers should consider different activities, tasks and work to attain firm's objectives and consider any kind of risk that could result to unanticipated outcome. Risks can be either negative or positive to an organization hence it is important to contemplate on them. When risks are not handled, they may result to organizational failure. On the other hand, when some risks are not taken, a firm may fail to reach its full potential.

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Risk management should be part of any project undertaken by an organization. In any project, Risks are bound to occur. Therefore, there should be strategies put in place to counter and manage these risks so that a project achieves its full purpose (Ready.gov, n.d.). This will help a project to reap full benefits because the objectives can comfortably be met when the risks are controlled (Stephenson, 2010).Secondly, risks are normal occurrences in a project that should be identified early enough. One should be able to contemplate on the future scenarios. One should talk to the project team members through interviews and risk brainstorming. This will have held to identify the risk areas. Consulting an expertise on the field of project one is dealing with is very important since they have information that could help identify opportunities that could improve the project (Stephenson, 2010).

One way of evaluating whether a particular risk outcome will be positive or negative is to conduct a risk assessment. This involves finding potential hazards and identifying the impact in case the of its occurrence. Risks occur differently depending on the industry of work. They include those that affect employees, such as injury, illness, death or losing a key individual. In operations, a firm may lose access to key assets, cut in supplies and operations, and distribution failures. Further, a firm is likely to lose employee or customer confidence or even face a damaged market reputation. Likewise, accountability failures, fraud control challenges, internal systems control, overspending, budget cuts, and product and service quality are some key risk that may an organization (Mindtool.com n.d). A mistake in executions; are human-made errors that can come about due to negligence or, policy violations; results when there is a failure to follow the laid policies and laws that govern project operations. Breaching of rules; Going against the set standards of behavior or code of ethics that govern a firm's operation. Legal infringements; these are external forces that may pose a risk to an organization. In some cases, an organization may put a project on hold or indefinitely halted due to legal requirements that are not clearly stipulated. Direct and indirect additional risk-taking; project team members, project managers or other stakeholders may also decide to take some risks (Mindtool.com n.d).

Risk management could be improved through a number of ways. They include reducing risks by minimizing events that could increase the risks e.g. employing more staff to ensure three is enough human resource handling key responsibilities in an organization (Mindtool.com n.d). The organization can further train the existing employees to improve their capacity to handle various threats. Consider training employee risk management methodology, the training should include both risk analysis techniques and managerial skills essential for interpreting risk assessments. Organization owners may lack specific expertise and experience all the risks in the organization without any assistance.

With regards to departmental changes, in order to reduce risks and lighten the threats, all the departments must be headed by the senior most member of staff who understands all the processes well. They will help in the interpretation of job specification and risk assessment reports. In addition, put in place proper communication by adopting open communication policy and provide good leadership Put in place proper and clear channel of communication, address the specific needs of different departments such as sales, procurement, production (Ingram, 2015). Some departments such as procurement and finance should be merged to reduce operation cost and sharing or resources. This will go ahead to create awareness of specific job functions in each area of concern. Moreover, use open door communication policy, which allows frequent scheduling of meetings at both subordinate and departmental levels where both present and future goals, training initiatives and other methods to improve communication can be, discussed (Ingram, 2015). Communication is important because it creates workplace cohesion.

Transferring the risk; transferring the risk to a third party in the project, so that they bear the risk. This can be an insurance agency, which in most cases incurs a cost. Retaining the risk; if the risk will not affect a project, and then project owners can bear responsibility (Ingram, 2015). Avoiding the risk; taking actions to ensure that prospective risks are avoided by terminating contracts. Containing the risks, immediate action can be taken to guard against any unwanted occurrence by having alternatives, enough funding and project team members being available to handle any unexpected occurrence.

Conclusion

In conclusion, risk management is crucial in the life of any organization. Risks present themselves in any scenario; they can be either internal or external forces. They ought to be managed in order to meet the organizational objectives as well as stakeholder expectations. If not well-managed organizations may fail to achieve its set goals or take a longer time to complete set goals. This means that many finances costs will be incurred, rendering a project economically infeasible.

References

Ingram, D. (2015). Why is organizational structure important? Retrieved from http://smallbusiness.chron.com/organizational-structure-important-3793.html

Mindtool.com (n.d). Risk analysis and risk management. Retrieved from https://www.mindtools.com/pages/article/newTMC_07.htm

Ready.gov (n.d). Risk assessment. Retrieved from http://www.ready.gov/risk-assessment

Stephenson, C. (2010). The role of leadership in managing risk. Retrieved from https://iveybusinessjournal.com/publication/the-role-of-leadership-in-managing-risk/