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RISK TREATMENTS, MONITOR & REVIEW, Fadhila Abidah
09111840000092
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RISK TREATMENTS
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Risk treatment measures
Transfer: Eliminate the risk by transferring it from one place to another.
e.g. selling doubtful asset, insuring activity with major risks
Reduction: Either to reduce the likelihood of occurrence of a risk or to reduce its consequences, or to achieve both objectives at the same time
The likelihood of occurrence of a risk can be reduced through management controls, organizational arrangements and procedures designed to reduce the frequency of an error or the opportunity for an error to occur
The consequences can be reduced by ensuring or guaranteeing that all of the controls are in their proper place in order to minimize any adverse consequences.
Elusion
1) not to go ahead with the project or the activity that would involve the risk, or
2) to choose alternatives for the activity that will achieve the same result and do not bring with them the risk detected
Diversification: spread the risk from a specific area to different sections, in order to prevent the loss of the entire project
e.g. Diversify list of products/services, orient business towards new markets & suppliers
MINIMIZATION STRATEGY
Contingency plan: alternative procedures and processes that must be undertaken in an organization when a risk is no longer a risk but rather a reality
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Risk treatment process consists of selecting and applying the most appropriate measures, in order to be in a position to modify the risk, with the aim of avoiding the damages/making use of the advantages
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MONITOR & REVIEW
Why?
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In today’s continuously changing business environment, factors affecting the likelihood and consequences of a risk are very likely to change also
How?
Organization must collect and document experience and knowledge through a consistent monitoring and review of events, treatment plans, results and all relevant records
Regularly review risks identified in the firm’s risk register. Document any actions or events that change the status of a risk, for example:
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The results should be recorded and reported externally and internally, as appropriate
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