Reading Reaction Journal#5
The author starts the article with the definition of risk management as "the process of measuring or assessing risk and developing strategies to manage it". Then he mentions examples of these strategies like avoiding the risk and decreasing the negative effects of the risk. The author clarifies that there are many different kinds of risk management. However, in spite of these kinds, all organizations have risk management. The author describes the ideal risk management and what its process is. It has two steps; the first one starts with establishing the context. The second one identifies possible risk. He also explains that not all plans will be successful but experience and the actual loss results will make different decisions to deal with risk. The author states that the ideal risk management deals with resources by decreasing spending and increasing the reduction of the negative results of risk. The risks should be assessed and prioritized properly in order to save time. Finally, the author clarifies that organizations cannot avoid all risks, so they have to learn how to cope with them.
I think risk management is one of the most important departments in any company or even government departments. I also think that the budget of risk management is the most difficult part because you want to reduce the complications and at the same time reduce expenses. The director of risk management needs to be careful in estimating the risks because in cases of mis-appreciation of risk, losses will be large and devastating. On the other hand, he does not need to waste time on risks that are not possible to happen. Recently, I understood the importance of risk management because of what happened to my favorite city, Jeddah, two weeks ago; heavy rain poured on the city, which led to huge damage in the east and south areas of Jeddah. The reason is that the companies which planned and built these areas did not estimate the likely risk of the absence of the drainage system. What happened was devastating, and because of that 120 people have died so far, a large number of houses and shops were destroyed, and thousands of families have been forced to leave their houses because of the floods. In fact, although I agree with the author that people cannot avoid all risks, but they have to accept some degree of it, I think establishing a drainage system and assessing the risks of not establishing the should have been one of the first priorities of the responsible company.
Tabije, I (2008 May1). Risk Management. Retrieval on Dec 08, 2009, from Best Management Articles http://risk-management.bestmanagementarticles.com/a-389-risk-management.aspx