Rotterdam School of Management
|Learning objectives|| |
After you have studied this module, you will be able to:
Chapter 1: Introduction
Chapter 2: General learning objectives
Chapter 3: Risk and risk management
Chapter 4: Risk measurement
Chapter 5: Dispersion of the normal distribution
Chapter 6: The use of derivatives
Chapter 7: Risk management, the organization and its people
Chapter 8: Risk management and value creation
Chapter 9: Risk management at financial institutions
|Read Module Excerpts||Risk Management|
Why Open School of Management believes that risk management is important
Risk management involves the assessment, identification, and prioritization of risks in any industry including those related to the environment and journalism. Each of these tasks must be accomplished to successfully manage risk.
Risks may come from any type of uncertainty. For example, risk may originate from project failures, legal liabilities, accidents, and natural disasters. In addition, fraud, theft, storage of sensitive data, and sexual harassment are types of risks that can be mitigated. Specifically, journalists must be concerned about reducing the risk related to libel, slander, and defamation. To reduce risk, there must be a plan in place.
Risk management standards have been defined not only by ISO standards and actuarial societies but also through Project Management Institute and the National Institute of Standards and Technology. The definition of the standards will change based upon the industry addressed. For instance, the standards for engineering will be much different from the standards for journalism.
There are many different strategies to mitigate risk in any industry. The most common ways of risk mitigation include threat avoidance, threat transference, and threat reduction. While most ways of risk mitigation are effective, some risk management standards have come under criticism. That is why it's important to select the risk management standards that are most effective for your industry.
Once the risks have been identified, the best plan must be selected to reduce risks and also to prioritize risk management. Risk can be mitigated by budgeting for it and accepting the consequences of the risk. You can also transfer risk to another party. For instance, you can mitigate risk by purchasing insurance to protect your assets from fire damage or flood damage. It's important to have a risk management plan to protect your people and your company's financial assets.
Some common goals of risk management include the concept of creating value and being a part of the decision-making process. You should also explicitly address uncertainty and assumptions in addition to being systematic and structured. A risk management plan should take human factors into account, be tailorable, iterative, dynamic, and responsive. Every plan should include a plan for continual improvement and enhancement.
Return to Special Areas of Management (MC modules).