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Managing Risk & people - Coggle Diagram
Managing Risk & people
Change concept
REASONS FOR CHANGE RESISTANCE
- Organizational change might lead to uncertainty
- When change is introduced, it is most likely that the management affected would experience an upsurge in workload.
- The resistance may intensify when there is a forced and rapid change. This is because the employees affected are given insufficient time to prepare themselves and understand the change.
- When individuals lack the required skills to use new systems in line with the introduction of new technologies, the resistance to change may increase.
MANAGING RESISTANCE TO CHANGE
- Education and support by Promoting the benefits
of change
- Allowing employees to participate in the change process may reduce change resistance.
- Where employees’ rights and pay are affected by the change, management
may offer incentives such as flexible working hours or additional pay, to ensure that individuals & labor unions support the change.
- An informal policy can be implemented as a support and an opportunity for staff involved in the change process to ask questions.
Risk
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RISK CATEGORIES
- Fundamental risks are risks that affect
society in general, broad groups of people, and are beyond the control of any individual. (risk of air pollution)
- Particular risks are risks that an individual may have some measure of control (risk attached to smoking)
- Speculative risks are those from which either good (upside risks) or harm (downside risks) may result. (A business venture)
- Pure risks are those risks that the possible outcome is only causing harm.( risk facing those people infected by the virus.)
TYPES OF RISKS
BUSINESS RISK are what businesses face due to the nature of their operations and products.
- Strategic risk - Risk that business strategies will fail
- Product risk - Risk of failure of new product launches or loss of interest in existing products
- Commodity risk - Risk of a rise in commodity prices. (e.g.
crude oil) and risk of disruption to operations due to a shortage of necessary supplies or sub-standard supplies
- Operational Risk - Risk that business operations may be
inefficient, or business processes may fail.
- Contractual Risk - Risk that the terms of a contract do not fully cover a business against all potential outcomes.
- Environmental and social risk - Risks arising from changes in the business environment
ECONOMIC RISK is the risk that changes in the
economy might affect the business.
- The changes could be inflation, unemployment rates, international trade relations or fiscal policy decisions annouced by government
- considered to be external to the business.
FINANCIAL RISK is the risk of a change in a financial
condition such as an exchange rate, interest rate, and customers’ credit rating.
- Credit risk: Risk of non-payment by customers.
- Political risk: Risk arising from the government’s actions that affect the financial aspects of the business.
- Currency risk: Risk of fluctuations in the exchange rate.
- Currency risk: Risk of fluctuations in the exchange rate.
RISK MANAGEMENT STRATEGY
Transfer risk
- risk can be transferred wholly or in part to a third party. A common example of this is insurance.
Avoid or abandon risk
- A company may decide that some activities are so risky that they should be avoided
Pool risks
- Risks from many different transactions can be pooled together. each individual transaction or item has its potential upside and its downside risks.
Diversify risks
- The idea is that the risk in one area can be reduced by
investing in another area where the risks are different or ideally opposite.
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