Risk Classification and Types of Pure Risks

Risks can be classified in many forms.

Fundamental vs Particular
Fundamental risk is a type of risk that affect a large number of people in an economy. Earthquake and war are the examples of those. If it is originated from nature of society, namely act of war and unemployment risk, then it is not insurable. Meanwhile, fundamental risks as a result of physical or natural causes may be insurable.

On the other hand, particular risk is a risk that affect only individual. For instance, fire, robberies and thefts. These risks are all insurable.

Risk Classification and Types of Pure Risks

Dynamic vs Static
Risks can also be classified by dynamic and static. Dynamic risk occurs due to changes in economy that causes financial loss to certain people. It exists as a result of adjustment to misallocation of resources in the economy. In modern times, one of the clearer examples is the rapid change in information technology industry. Many companies were made victims while others were emerged as new successes.

Static risk, on the other hand, happen even though there are no changes taking place. During market boom or collapse, there are people making losses. These types of losses are due to natural perils like earthquakes, typhoon or moral hazards like cheats. Static risk brings no benefits to the society, only pure losses.

Pure vs Speculative
Risks can also be categorized as pure or speculative. In pure risk, there is either a possible loss or no loss. In contrast, there are possibilities of gain or loss in speculative risk. Pure risk can be insured while speculative risk can't. However, the pure risk consequences of speculative risk is insurable. For instance, decision to manufacture a brand new product involves speculative risk, either gaining from the product or making losses. So, it is not insurable. But if the factory is burnt down by fire and as a result, cannot supply to the dealers, these losses are considered as a pure risk and therefore insurable.

There are basically 3 types of pure risks that concern an individual

Types of Pure Risks

Personal Risks
They incur losses like loss of income, additional expenses and devaluation of property. There are 4 risk factors affecting this:

1. Premature death. This is death of a breadwinner who leaves behind financial responsibilities.
2. Old age / retirement. The risk of being retired is not sufficient savings to support retirement years.
3. Health crisis. Individual with health problem may face potential loss of income and increase in medical expenditures.
4. Unemployment. Jobless individual may have to live on their savings. If his savings is depleted, the bigger crisis is awaiting.

Property Risks
It means the possibility of damage or loss to the property owned due to some causes. There are two types of losses involved.

1. Direct loss which means financial loss as a result of property damage.
2. Consequential loss which means financial loss due to the happenings of direct loss of the property.
For instance, a shop lot which is burnt down may incur repair costs as the direct loss. The consequential loss is being unable to run the business to generate income.

Liability Risks
A person is legally liable to his wrong doings which cause damages to third party's body, reputation or property. He can be legally sued and the most horrible thing is there is no maximum in the compensation amount if you are found guilty.

Knowing how the risks are classified and the types of pure risks an individual is exposed to will surely give you a fundamental on the risk topics and prepare yourself to further acquire the knowledge of how to manage risk.

Risk Classification and Types of Pure Risks
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For more information on risk management, visit http://www.101lifeplanning.com/insurance-planning/insurance-planning.php
To view the importance of a life insurance, visit http://www.101lifeplanning.com/insurance-planning/what-is-the-importance-of-life-insurance-policy-to-you-and-your-family.php

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9 Tips For Management Success - Skills Necessary to Be an Effective Boss

Would you like to improve on your management skills? Whether you are a business owner, an executive, mid level manager, or beginning supervisor you can develop your skills which will increase the productivity of many of the people who report to you. Though simple in concept, these skills may require practice and dedication to master, unless you are a "natural" manager. (Even "natural" managers can improve their skills, and if you are a "natural," you already know that you can be even more effective.)

Working with people requires interpersonal skills that can come more easily to some people than others. Especially if you have been promoted because you have great technical skills and experience, you will want to avoid becoming a victim to the "Peter Principle." The definition of the Peter Principle is as follows...

The theory that employees within an organization will advance to their highest level of competence and then be promoted to and remain at a level at which they are incompetent.

9 Tips For Management Success - Skills Necessary to Be an Effective Boss

[After Laurence Johnston Peter (1919-1990).]

The level of incompetence suggests that people will rise to a level of management that they are untrained to do with success. Managing other employees with skill and competence is often the level that proves most difficult.

To become a successful manager requires certain awareness and then specific skills at communicating, motivating, time management, effective delegation, training, hiring winners, personnel evaluation (or appraisal), self-awareness, and healthy self-confidence. You can neglect any of these qualities/skills and still get by as an average or poor manager or you can confront the personal challenges and develop into a good boss and successful manager. Good, to great, interpersonal skills will help a lot but not everyone has these skills when are getting started in managing.

To become skillful, you first have to realize that may not be perfect and that you would be willing to make positive changes to some deeply held beliefs or habit patterns. Sometimes we have to "unlearn" habits or techniques that we have used, or seen used by our parents, teachers, ex-bosses, or mentors. As an example, have you ever seen a frustrated parent or manager yelling emotionally in an upsetting moment. There may even have been violence or intimidation expressed and you realize that in the modern world of work, this is not acceptable as a motivating or guiding management concept. These explosions of emotion may work once or twice, in the "short term," but will not work effectively for long term success. "Explosions" tend to damage relationships and may require too much time and energy to repair, which can be very difficult to do if your employment has been terminated.

There can be frustrations in interpersonal interactions, however, but appropriate managing in these difficult situations is what sets the great managers apart from less prepared, less successful managers.

1. Your personal motivation to be open to change and the desire to become a great manager is essential.

2. Self-awareness regarding your strengths, and more importantly, your challenges (your flaws/weaknesses) is very important. It is best to know, and understand, your own style of communication, your own motivations, and the difference in the styles and motivations of the members of your team so that you can communicate with, and then motivate, all team members most effectively.

3. Your abilities to communicate can be developed and enhanced to allow you to manage more effectively. Especially important is the ability to listen and the patience to really understand what you are hearing from your communication partner. (Do not rush to respond. Show respect and draw your partner out until you can clearly re-state what they are attempting to communicate.)

4. Negotiate a fair resolution, where possible. Rally your communication partners allegiance to your mutually agreed upon solution. Set a reasonable and verifiable timeline for accomplishment of the goal or project. "Clearly prioritize" the efforts of the project, the team, and each individual's role in the project.

5. Offer support (and mentoring) along the way, without micro-managing along the way. Positive feedback and, most importantly, plenty of positive recognition (and celebration) for positive movement and ultimately for success will be worth your time and effort.

6. Show respect and try to see your partner's point of view without overtly judging. Good delegation tolerates solutions that may follow a different path than you might have chosen. Though taking responsibility for their decisions and actions can be a very important step by your employee and should be discussed in the planning (job description) phase of the delegation process. (It is best, where possible, to allow for creativity by your team members.) Find ways to get your people to "fall in love" with your project, and hopefully, your company by allowing creative input into the project development process.

7. Clarity is important and should include the "big picture" of what is desired for long term success of your organization and how all of your individual team members will fill the necessary roles to accomplish the objectives of the project at hand. (Everyone needs to know their roles and their value to the project.)

8. Honor and acknowledge as many individuals, and of course the team, as often and as much as possible. This is especially true when deadlines are tight, team work is good, and creative solutions are developed. Rewards and acknowledgment do not always have to be in financial rewards (though team members who are high "Utilitarians" will require appropriate remunerations or other forms of compensation for their successful work.) Not everyone is motivated, solely, by money. This is where knowing your people will work as a successful retention strategy. Be creative in providing recognition and rewards.

9. You need to really care! Care about your team. Care about the project. Care about the company/organization, if at all possible. Your team will know if you do not "really care" and they will treat the project in the same way they see (or feel) their manager's level of commitment.

If you find that you require clarification on any of these tips or could benefit from coaching to enhance your skills then find the best coach, trainer, or mentor to get you to the level you require. Do not think that you have to "re-invent the wheel" or figure it all out on your own, get feedback and assistance. Recognizing where you require assistance is the most important step you can make toward your eventual success. People who do not know how to ask for help are often the ones who do not reach their full potential. If your organization does not support you in your quest for improvement then consider doing this for yourself and possibly exploring other more supportive and empowering organizations.

Many managers have great technical: training, experience or skills, but have not been coached or mentored as managers. If you are looking for coaching or management development, please consider the Professional Management Coaching Program for manager skills training.

9 Tips For Management Success - Skills Necessary to Be an Effective Boss
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L. John Mason, Ph.D. is the author of the best selling "Guide to Stress Reduction." Since 1977, he has offered Success & Executive Coaching and Training.

Please visit the Stress Education Center's website at Stress, Stress Management, Coaching, and Training for articles, free ezine signup, and learn about the new telecourses that are available. If you would like information or a targeted proposal for training or coaching, please contact us at (360) 593-3833.

If you are looking to promote your training or coaching career, please investigate the Professional Stress Management Training and Certification Program for a secondary source of income or as career path.

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What is Organizational Innovation?

Defining Innovation

Organizational innovation refers to new ways work can be organized, and accomplished within an organization to encourage and promote competitive advantage. It encompasses how organizations, and individuals specifically, manage work processes in such areas as customer relationships, employee performance and retention, and knowledge management.

At the core of organizational innovation is the need to improve or change a product, process or service. All innovation revolves around change - but not all change is innovative. Organizational innovation encourages individuals to think independently and creatively in applying personal knowledge to organizational challenges. Therefore, organizational innovation requires a culture of innovation that supports new ideas, processes and generally new ways of "doing business".

What is Organizational Innovation?

The Benefit of an Innovative Organization

In promoting a culture of innovation organizations should foster:

- Cross functional team building while discouraging silo building

- Independent, creative thinking to see things from a new perspective and putting oneself outside of the parameters of a job function

- Risk taking by employees while lessening the status quo

The value and importance of knowledge and learning within organizational innovation is crucial. If innovation is about change, new ideas, and looking outside of oneself to understand ones environment, then continuous learning is a requirement of organizational innovation success.

The value of learning and knowledge can only be realized once put into practice. If new organizational knowledge doesn't result in change, either in processes, business outcomes, or increased customers or revenues, then its value hasn't been translated into success.

The road to organizational innovation lies in the ability to impart new knowledge to company employees and in the application of that knowledge. Knowledge should be used for new ways of thinking, and as a stepping stone to creativity and toward change and innovation.

Steps to Innovation

To determine how supportive your current environment is in fostering innovation read the frequently asked questions and answers below, about how to build an organizational culture that encourages innovation.

1) Is a climate of innovation supported by senior management?

a. That means, that such activities as risk taking and small ad hoc work groups that brainstorm and talk through ideas need to be promoted, supported and encouraged in the organization.

2) Do managers routinely identify and bring together those individuals more oriented toward innovation those willing to think new ideas and act on them?

a. Identifying new thinkers and individuals oriented toward change helps to ensure an outlet for innovation by supporting these individuals and giving them and like-minded colleagues the time and opportunity to think creatively. This is tantamount to becoming an innovative organization.

3) Is there a process in place monitoring innovation teams and identifying what has and hasn't worked as a result of them?

a. Maintaining and monitoring innovation is important. This requires checks and balances that identifies how innovation is developed and managed and processes that capture what did or didn't work. In order to be able to continue to innovate in a changing environment, continually monitoring the internal and external environment to determine what supports or hinders innovation is key.

4) How can an organization be strategic and focused on it goals yet build and develop an innovative culture?

a. The value of a strategic focus remains important to a company's success. In fact, clear direction and understanding of a company's mission can help fuel innovation - by knowing where in the organization innovation and creativity would provide the most value. An innovative organizational culture creates a balance between strategic focus, and the value of new ideas and processes in reaching them.

5) Is there a single most important variable or ingredient that fuels an organization toward an innovative culture?

a. Similar to other successes of an organization, what drives innovation are the people of the organization. First, management must set the expectation of innovation and creativity and then "doing business" is about how to improve processes, products and customer relationships on a day-to-day basis. This mindset itself will create an ongoing culture of innovation.

What is Organizational Innovation?
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How to Give Your Partner a Prostate Massage

Prostate massage, when performed on a regular basis, can be used as a preventative treatment against prostate cancer. It is good for prostate health in general, and can decrease the risk of prostate enlargement--that is, benign prostate hypertrophy (BPH). Prostate massage is also a form of sexual play. Whatever your reason may be, let's say you would like to do prostate massage on your husband or partner. Here is how to go about doing it.

First of all, make sure he is okay with having a prostate massage. Let him know the procedure so that he understands what will happen. If he seems comfortable with it, then you can go ahead with it.

Keep your fingernails neat and trim. File off any jagged edges.

How to Give Your Partner a Prostate Massage

Ask your partner to urinate or do a bowel movement before having a massage. It is important that he should be as relaxed as possible. You may want to try a relaxation technique as well.

Clean your hands, use a sterile latex glove, and dab a bit of water-based lubricant on the glove's fingertips. Then gently insert your fingers into his anus. Carefully push them inwards and upwards, against the rectal lining towards his front side. Move your fingers roughly the direction of his navel.

You do not have to push in too far, just a little more than an inch--about 3 cm. Then you will touch the prostate gland, a small round bulb of tissue about the size of a large walnut. Give it a gentle massage by rubbing it lightly along its sides. Do not press hard on the gland's central portion, as that is where some sensitive nerves are located. Do not touch the prostate gland with your fingernails.

At some point, your partner may feel like he wants to urinate, even though he does not have to. That may feel somewhat confusing, but try to reassure him and, if he is okay with it, you can continue.

Your partner will become stimulated and may even ejaculate--but it is all right if ejaculation does not occur, as it doesn't always happen.

And that is how you give your partner a prostate massage.

How to Give Your Partner a Prostate Massage
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Asparagus and Kidney Stones

Asparagus and kidney stones seem to be a subject that is up in the air. Asparagus has been noted as beneficial to kidney stones and it has also been noted as being something to avoid if you have kidney stones. This controversy seems mainly due to the simple fact that there is more than one kind of kidney stones. It seems that if you have a certain type of kidney stone that you will want to go out of your way to avoid asparagus, as it will only worsen your condition. If you eat asparagus with the wrong type of kidney stones you may be setting yourself up for a surgical procedure when it could have been avoided. This is the most important detail when approaching the subject of asparagus and kidney stones.

The types of stones that can be dealt with using asparagus are known as uric acid stones. These stones form in urine that is simply too acidic. So, if you are prone to these sorts of stones you will want to steer clear of foods like spinach, rhubarb, sorrel, beet greens, chocolate, and even green tea. All of these foods are rich in oxalic acid which leads to the formation of uric acid stones. If you do happen to eat any of these foods, avoid eating these with foods that are high in calcium simultaneously.

If you do find that you have developed this type of kidney stone, this is the time to utilize the asparagus. At this time, other good foods to ingest are cherries, strawberries, apples and apple juice. These foods will help bring your urine to a more acceptable and less troublesome alkaline level. There is no particular recipe for preparing the asparagus when ingesting it for relief of this health problem. It can be eaten raw or prepared a number of ways. The only way of preparing this food that should be avoided is by steaming. Steaming is bad for any vegetable, as it steams the nutrients and other important dietary compounds right out of the vegetable.

Asparagus and Kidney Stones

Now, on the other hand, if you are being affected by stones that were formed by eating too many alkaline types of food, avoid asparagus! In this scenario, asparagus will irritate and worsen the problem rather than be of any help. Any foods like asparagus, cucumber, radish, tomato, spinach, rhubarb, or any other vegetables with strong aromas are a bad idea on this end of the spectrum.

If you are unsure about which stones you suffer from, save yourself some trouble and get to the doctor. Home remedies are great as long as you know exactly what you are dealing with. However, if you are being affected by kidney stones for the first time, you will want to get yourself tested to pin point the problem. It is much better to be safe than sorry in this situation. When you run the risk of potentially making your symptoms and condition worse, proceed with extreme caution for your own safety.

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Risk Management Within an Organisation

Introduction

This manual is written to advise on an approach to managing risk, with regards to procedures to follow in conducting risk analyses and treatment.

Background of my Organisation

Risk Management Within an Organisation

I will focus my attention on the management of risks for my company in general. My company is involved in the trading of steel products, mainly for construction purposes, as well as the sales and purchases of agricultural products such as beans, maize and rice. With regards to these products, letters of credit (LCs) have to be initiated regularly for such products to be sold overseas. As part of the accounting and finance function, my responsibilities are not only in the proper accounting treatment of such transactions, but also as part of the team involved in a new trade financing project to ensure the smooth flow of these transactions from the opening of LCs, the financing as well as the delivery of these products. Such a flow will involve the cooperation of both the operations and the accounting and finance departments.

Purpose of Risk Management

Business risk relates to exposure to certain events that will have a negative impact on the strategies and objectives of the company. Hence business risk is due to two factors: the probability of an event occurring as well as the seriousness of the consequences (Bowden, Lane and Martin, 2001). There are several risks that are more specific to my organization, and are shown as follows:

1. Strategic risk, such as poor marketing strategy and poor acquisition strategy, as a result of poor planning (Bowden et. al, 2001). Poor marketing and acquisition of different grades of steel and agricultural products can prove the downfall of the organization.

2. Financial risk, such as lack of credit assessment and poor receivables and inventory management, as a result of poor financial control (Bowden et. al, 2001). Inadequate credit assessment of potential trade and other debtors as well as low debtors' turnover can be a poor reflection of the company's strategy and objectives.

3. Operational risk, such as poor practices and routine actions, as a result of poor human actions (Bowden et. al, 2001). Non-conformity to the organization's safe practices or even willful actions by employees can create potential operational and financial losses to the company.

4. Technical risk, such as equipment and infrastructure breakdown and fire destruction, as a result of failure of physical assets (Bowden et. al, 2001). Such risks can be prevalent in my organization if appropriate actions are not taken to prevent these technicalities. Unfortunately, many organizations tend to focus too much on the performance and cost dimensions of technical risk and manage them too heavily (Smith and Reinertsen, year unknown).

5. Market risk, such as inadequate market research, which is the risk of not meeting the needs of the market, assuming that the specification has been satisfied (Smith and Reinertsen, year unknown). This risk may be more important compared to others, however it is less manageable due to the risk being less objective and quantifiable compared to say technical risk

As a result of such risks mentioned above, coupled with the advancement in technology and competitive pressures, risk management has taken a more important role in the existence of businesses today (Bowden et. al, 2001). Risk management relates to the logical and systematic way of establishing context, identifying risks, analyzing risks, evaluating risks and lastly, treating risks. This approach also involves communicating and consulting the findings as well as monitoring and reviewing the treatment of risks. This approach to managing risks is known as the AS 4360 method (Bowden et. al, 2001).

Risk Management

Step 1: Definition of Context

This relates to the establishment of context in terms of strategic, organizational and risk management (Bowden et. al, 2001). The strategic context is concerned with the relationship between the organization and its parameters in terms of financial, operational, competitive and social context (Bowden et. al, 2001). In the case of my organization, we are concerned with our financial objectives (i.e. sales turnover of US million with a profit margin of at least 12% annually), products with high quality and good customer satisfaction, as well as good market position (one of the top suppliers of steel in the regional construction industry). The strategic context also requires the organization to identify the stakeholders, which includes the owners, employees, customers, suppliers as well as the local community (Bowden et. al, 2001). In addition to that, my organization will have to be accountable to our shareholders and the media as well, since we are a local listed company.

The organizational context will be concerned with wider goals, objectives and strategies of the company as a whole (Bowden et. al, 2001). In this context, we have to establish and implement sufficient key performance indicators (KPIs) and critical success factors (CSFs) that are suitable to the different aspects of the business. There are a couple of KPIs that are commonly used in my organization:

1. Revenue and profit targets: These are mentioned above.
2. Customer satisfaction: Surveys are sent quarterly to our suppliers and customers to ensure at least 90% customer overall satisfaction.
3. Stocks update and on-time deliveries of goods: Sufficient stocks are maintained and retrieved from suppliers and deliveries have to be made on time to customers at least 98% of all sales orders.
4. Timely submission of monthly accounting and sales records to head office: The deadline of submission of such reports is usually the 5th of each month, which has to be strictly adhered to.

On a wider basis, such KPIs are also linked to CSFs in my organization, which includes the following:

1. Maintaining a healthy position in our markets: This is mentioned above.
2. Supportive top management open to marketing and financing ideas: The directors and senior management have a fortnightly meeting with lower management on possible ideas and brainstorming on ideas and possible financing from banks on certain products.
3. Sufficient funds and resources in place: Funds have to be in place for LCs, which are converted to trust receipts, which have to be settled within certain tenure, coupled with adequate manpower and technologies for proper functioning of the organization.

With these KPIs and CSFs in mind, the various activities of the can be further segregated into smaller teams and activities to provide a more logical flow for better analysis (Bowden et. al, 2001). In my organization, the sales teams are broken up into smaller groups in charge of various products for steel and agricultural aspects. This is also done likewise for the finance department, which has smaller teams in charge of receivables, payables and other administrative functions.

Step 2: Identification of Risks

This process aims to identify all events, which might affect the organization as a whole. In such a scenario, there is a need to identify all causes and potential situations (Bowden et. al, 2001). After which, we will proceed to link the risks, both threats and opportunities, with key criteria that will have a direct impact on the organization (Bowden et. al, 2001). There is also a requirement to approach these risks with proactive and reactive responses (Bowden et. al, 2001). There are several tools that can help with identifying risks, namely brainstorming, checklists and judgements based on experience.

In my organization, there are several tools used to identify risks. For the finance department, there is a quarterly checklist used on different risks involved, which can include the amount of tax incurred and tax credits agreed with the tax authorities, the amount of receivables and stock updates and how efficient their respective turnovers are. Provisions for such items are also raised based on prior experience. For the marketing and operations department, weekly meetings are conducted whereby brainstorming and systems analysis are used to identify possible risks with regards to competition, changes in prices and tastes of customers as well as the safe-guarding of stocks at our premises. It is further recommended that a product plan with a product manager be put in place, with rankings are given to the priority of such risks and the inputs, processes and outputs should be investigated in greater depth (Bowden et. al, 2001).

It is mentioned that a test market will be useful if there is a high degree of uncertainty about the eventual sales of the new product as the launch date approaches (Cooper, year unknown). My organization is currently looking at possible new sales of liquor and diesel for its overseas markets. However, these possible sales are not considered new products in the existing markets. With speed and the competitive environment being important facts, a test market may not be applicable in our scenario (Cooper, year unknown).

In addition to the launch of possible new products, there are several pitfalls in considerations for my organization:

1. Lack of market orientation. These are possible risks considering insufficient market analysis and not understanding customer needs and wants.
2. Poor quality of execution. With regards to my organization, the grades or quality of the flammable new products might be filled with deficiencies, hence not meeting customers' needs.
3. Moving too quickly. A too hasty approach to launch these products might render too many mistakes in the process and compromise the quality and timing of the promotional activities (Cooper, year unknown).

Step 3: Risk Analysis

This step involves the estimation of the likelihood and consequence of possible risk events. These are often evaluated using the current controls in place (Bowden et. al, 2001). Such controls are needed to ensure effective operations, reliable reporting systems and proper compliance with rules and regulations (Bowden et. al, 2001). In my organization, controls in place will include past records, market analysis given by traders from different countries, published literature in the form of accounting and marketing magazines and internal and external auditors' reports.

There are several techniques that are used to establish likelihood and consequence, namely structured interviews, multi-disciplinary groups of experts, assessments using questionnaires and computer modelling (Bowden et. al, 2001).

The decision tree technique can also be used whereby the expected net present value (NPV) of cash flows associated with each individual outcome is shown (Vlahos, 2001). This technique is useful for the following reasons:

1. It improves our understanding of each outcome and makes assumptions more forthcoming.
2. It is useful for documenting and communicating thoughts on uncertainty and also helps generate alternatives for better value enhancement.
3. Managers can monitor each stage of the project and make appropriate analysis with regards to decisions made at each point
4. The outputs in terms of expected NPVs generated can be used as potential inputs for projects selection (Vlahos, 2001).

This technique is highly recommended for my organization in two ways:

1. This can be used in decisions made by the marketing department in terms of which products to obtain for potential markets.
2. The finance department will also find it useful in terms of the different ways of financing (i.e. direct cash financing, using LCs or trust receipts) in consideration for the building of the trade finance project.

There are two types of risk analysis, mainly qualitative and quantitative (Bowden et. al, 2001).

Qualitative Technique

A qualitative method makes use of words or descriptive scale and comes in the form of a ranking structure, alternating between Rare and Almost Certain. Such a method is concerned with raking likelihoods and consequences (Bowden et. al, 2001). With regards to construction projects, which can be applicable to my organization, the consequences can range from insignificant (whereby there is no injuries and minimum financial loss), moderate (injuries with medical help required and moderate financial loss) to catastrophic (death with significant financial loss). Such a qualitative table with various likelihood and risk levels matrix can be useful in the following scenarios:

1. Initial screening guide to identify possible risks for further analysis.
2. Where the level of risk does not justify the time and effort required for more analysis.
3. Insufficient numerical data, which renders a quantitative analysis useless.

For the qualitative analysis, the management and staff with regards to the risk events at different levels must work through the risk-ranking matrix. Each likelihood and consequence criteria should be considered in order to put events in the appropriate category (Bowden et. al, 2001).

However, there are several disadvantages associated with this technique:

1. It may not be too accurate as events within the same category may have substantially different levels of risk.
2. There may not be a common basis for comparison of risk i.e. on dollar basis or number of deaths.
3. There is no clear justification with regards to the process of 'weighing' risks
4. There could be different interpretations with regards to the meaning of different consequences i.e. the word catastrophic can mean a great deal to some people, while others might take it more lightly.
5. It can be difficult to translate the findings from this technique to match that of a quantitative method (Bowden et. al, 2001).

With these pitfalls mentioned above in mind, I would think that it will be better to consider the qualitative technique as more of an initial screening exercise which should be used concurrently with the quantitative technique.

Quantitative Technique

This approach takes the product of likelihood and consequence, with the consequence expressed as an actual variable (Bowden et. al, 2001). Such a technique is more reliable as it relies on numerical values, with estimates of frequency being made in terms of event frequency (Bowden et. al, 2001).

There are several drivers of risks, namely, technology, people, systems, organizational factors and external factors (Bowden et. al, 2001). In my organization, some drivers of risk might include how updated my computer versions of accounting and sales systems, the competency and educational levels of the employees, the number of new ideas by lower management accepted by higher management and possibly the amount of pollution our products might cause to the environment.

The quantitative analysis is further broken down into likelihood and consequence criteria. For the likelihood criteria, it is expressed as a probability instead of frequency, thus ensuring that risks are compared on a similar basis (Bowden et. al, 2001). With similar small events likely to occur, the likelihood of them occurring can be considered as one event. With regards to my organization, examples of such similar events might include:

1. 20 deliveries which are not made on time (more than 30 minutes) to customers resulting in losses of ,000 each for transportation costs
2. 5 deliveries of wrong grades of products to customers resulting in losses of ,500 for transportation and bank charges.

For the consequence criteria, it can be considered in terms of an event leading to possible death or severe losses i.e. financial or reputation losses. In the case of the two examples for likelihood criteria given above, the related consequence criteria are as follows respectively:

1. Free deliveries made for the next trip.
2. Appropriate discounts given for these batches of products sold.

The consequence criteria can also be expressed quantitatively in terms of non-performance or failure to achieve certain KPIs, reflecting on the organisation's priorities in accepting varying degrees of risks. In my organisation's case, the free deliveries and discounts given could jeopardize not only the revenue and profit targets, but also in terms of customer satisfaction (which are important KPIs). As such the consequence criteria can be expressed as the mean or expected value (Bowden et. al, 2001). This is consistent with the Monte Carlo method, which can be used to obtain the distribution of the project or product value associated with trading operations (Vlahos, 2001).

Step 4: Risk Evaluation

Risk evaluation is concerned with identifying which risks must be treated and can be calculated using the product of likelihood and consequence (Bowden et. al, 2001). The risks can be compared with previously established criteria. Different softwares such as the Monte Carlo approach, the sensitivity analysis and the probability distribution can be used to show the effects of major risks for evaluation (Bowden et. al, 2001).

Step 5: Treating Risks

There are several methods of treating risks, namely avoidance, accepting, reduction and transfer of risks (Bowden et. al, 2001).

1. Avoiding risks. In my organization, avoiding such risks would involve possibly not importing highly flammable products such as liquor or diesel (which are part of the consideration for new products) as part of sales and speculating in foreign exchange fluctuations.
2. Accepting risks. Certain risks may be unavoidable. In my organisation's case, we have huge sales transactions in Myanmar, which has just experience a major military and governmental coup. Hence sales in Myanmar may be volatile. These are potential risks, which are already factored in our business considerations.
3. Reducing risks. Currency fluctuations are imminent when trading with overseas counterparts for my organization. Hence LCs and hedging are done frequently in order to mitigate such risks for products purchased and sold to other countries.
4. Transfer risks. For my organization, this is done in terms of insurance coverage for stocks, which are housed in our premises.

Some other popular treatment of risks will include audit compliance programs, contractual obligations and conditions, preventive maintenance, quality assurance and contingency planning (Bowden et. al, 2001). Such treatments of risk are also maintained within my organization.

The different options for treatment of risks should be evaluated and risk treatment plans should be planned and prepared (Bowden et. al, 2001). Such a plan should consider detailed base implementations, risk assessment in terms of threats and opportunities in terms of priorities and recommended proactive and reactive contingency plans. (Bowden et. al, 2001).

The risk treatment schedule and action plan should include the following:

1. The different duties and responsibilities for implementation of plan. Preferably, the plan should involve a project leader and different members in charge of one aspect of the project reporting to the leader.
2. The resources to be utilized.
3. Work breakdown structure for the activities
4. Budget allocation
5. Schedule for implementation
6. Details of the mechanism and frequency for proper compliance to the treatment schedule (Bowden et. al, 2001).

Step 6: Communicating and Consulting

For this stage, stakeholders need to have a common understanding of the project or product situation. Consultation from stakeholders as well as experts is required for better opinions, with communication needed for better coordination (Bowden et. al, 2001).

Such an approach is required for several reasons:

1. To prove that the process is conducted in a systematic manner.
2. To provide records of risks and proper organizational records.
3. To provide relevant decision makers with a proper risk management and action plan for approval and implementation.
4. To provide accountability.
5. To facilitate further monitoring and review.
6. To provide audit trail.
7. To share information (Bowden et. al, 2001).

This report should include the following:

1. Executive summary
2. Scope of project
3. Methodology of study
4. Contextual issues of the project including the restraints
5. Success factors chosen
6. KPIs for each success factor chosen
7. Target and tolerance
8. Any assumptions
9. Top ten risks across all CSFs for the project or product plan
10. Vulnerabilities in phases of the project
11. Responsibilities for managing risks in phases
12. Primary and secondary drivers triggering each risk
13. Existing controls
14. Tables and figures (Bowden et. al, 2001)

Step 7: Monitoring and Reviewing

For the final step, there is a need to develop and apply mechanisms to ensure ongoing review of risks i.e. project leaders should provide a consistent update of the current situations (Bowden et. al, 2001). The effectiveness of the risk management process should be consistently monitored and reviewed (Bowden et. al, 2001).

Conclusion

Risk should be managed on an active basis. Risk management will involve identification of areas of high risks ahead of time, interpreted to the greatest degree possible, with the best technical or marketing talent allocated to the problem, have the problems solved as quickly as possible, and be provided with a contingency plan in case something cannot be resolved (Smith and Reinertsen, year unknown).

Reference List

Bowden, A., Lane, M. and Martin, J. (2001) Triple Bottom Line Risk Management. Wiley.

Cooper. (year unknown). New Products: Problems and Pitfalls. Pg 22-49.

Cooper. (year unknown). To test or Not to Test. Pg 123-129.

Smith, P. and Reinertsen, D. (year unknown). Managing Risk. Pg 207-21.

Vlahos, K. (2001). Tooling up for Risky Decisions. Pg 47-52.

Risk Management Within an Organisation
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Functions of Management - "Strategic Manager"

Many critics would say that the term "strategic manager" is an oxymoron. Those critics, however, have a narrow view of what a Manager or management team can do, especially since the best conceived corporate strategies often fail because the organization lacks the capability to execute those strategies. This is precisely why management is strategic. But one must not forget that management is also tactical in nature. Managers can play the role of coach, counselor, advisor, and change agent. This paper will discuss the four functions of management: planning, organizing, leading and controlling.

Change is part of the evolutionary cycle of everyday life. Today, more and more organizations are faced with a dynamic and changing environment that is necessary to maintain their existence in the competitive economic world of business. These organizations realize that change is here to stay and know that if they do not change they will not survive. Whether employees like it or not, managers, supervisors, and leaders have to implement organizational changes. Nicolo Machiavelli once said, "There is nothing more difficult to take in hand, more perilous to conduct or more uncertain in its success, than to take the lead in the introduction of a new order of things" (European History Quotes (2006). In the controlling function of management, managers must be able to provide managerial control, manage technology and innovation, create and manage change. To be successful change agents in any institution, managers must know the technical requirements of the change and understand the attitude and motivational demands for bringing it about. Change agents are risk takers who identify areas of needed change in the organization.

They demonstrate flexibility in goal setting and support and reinforce the individual efforts of subordinates during the change process. In addition, change agents recognize the need for change and identify the options and resources available to implement a change, as well as identify and implement appropriate strategies to minimize and overcome resistance to change (Wiest, D.,April-June 2006). For many organizations, change management initiatives first introduced organizational development (OD) concepts into the organization. In most cases, such change increased the demand for management activities in the area of training and development as the need for new skills emerged; managers have responded by providing such training either directly themselves or by bringing in OD consultants and trainers as needed. The role of the manager grew to become more consultative as the demand for managing change effectively across the organization grew. As a result, managers must assist leaders, staff and employees in planning and managing such "change initiatives" in parts of the organization or for the overall organization, thus engaging in OD work (Hawthorne, P. , 2004). Thus, the need for the organizing function in which managers must help to create an organizational structure with agility, human resources management, and a diverse workforce.

Functions of Management - "Strategic Manager"

Companies must be prepared to provide assistance to their employees in various situations. Mangers must lead and to do so must be able to provide leadership, motivate for performance, instill teamwork and communicate effectively. Often times it is a good idea for an empathetic and specially trained staff member to act as a counselor. This counselor would need to establish guidelines for the organization's response to the employee's situation, to make a list of resources that employees might need. It would also be advisable for the individual to make time for workers who are in need of this benefits or support. Many times this individual is a member of the human resources department. Whether dealing through issues such as death, performance management or employee relations, HR must provide these tactical roles for employees. But the role of counselor or advisor must also reach the levels of upper management. "The hierarchical model emphasizes the HR role as agent and advisor to corporate management while the professional model centers on the management of the relationship between the corporation and critical external groups" (Eisenstat, R. ,Autumn 1996) In many companies, the most basic role for the management function has been as an agent for, as well as an advisor and support to, top management. Managers must be able to think through the implications of business issues.. They must be able to investigate it, analyze it, intellectually incubate it, document it, base recommendations on it, and run it up the flagpole. Managers must concentrate on the critical problems of running the business. With administrative and operational efficiencies in place, the attention of managers has turned to other aspects of management. Faced with rapid and constant change, many organizations are seeking improvements in workforce productivity in order to maintain a competitive advantage and, as a result, turning to their managers to help redesign the management function in fundamental ways.

Managers must not only keep up with the pace of business, but also lead the way. They must move faster than even the fastest business teams, anticipating needs and providing solutions before executives ask for them. The clients and customers consider all of their needs to be top priority. Service quality requires them to be respectful of their requests, and to be as responsive as can be. Certainly they need to enable clients to meet their needs promptly and effectively. But they may do this by referring certain tasks to others who can perform them more quickly and efficiently, because of their expertise and service delivery systems. Managers can use technology (email, direct data base access, etc.) to enable employees and their departments to be more self-sufficient. They may also quickly reframe employees' requests as problems they themselves can solve, without our further involvement (Walker, J.,Sept 1999). Here lie the many functions of managers.

Functions of Management - "Strategic Manager"
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References:

Eisenstat, R. (Autumn 1996)What corporate human resources brings to the picnic: four models for functional management. In Organizational Dynamics, 25, p7(16).

European History Quotes ( 2006) retrieved December 8, 2008 from http://answers.yahoo.com Hawthorne, P. (Summer 2004)Redesigning library human resources: integrating human resources management and organizational development. In Library Trends, 53, p172(15).

Walker, J. (Sept 1999)Perspectives.(human resources management)(Column). In Human Resource Planning, 22, p4.

Wiest, D. (April-June 2006)The challenges of a change agent. In Topics in Emergency Medicine, 28, p125(4).

Paul Resurreccion is a life-long learner and student of online education. As a manager and business professional he has provided strategic leadership for various organizations.

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Risk Management Methods and Techniques

Risk management is not as difficult as it first appears, true it does vary on the size and operations of your business however using different methods can deal with that. Thinking of a toy manufacturing company for example may have a lot more to consider than a simple office workstation. When risk management is involved every possible procedure must be involved this creates what we call a strategy. Gathering knowledge on laws of risk analysis will be time consuming different areas that are needed to be dealt with are logistics, health and safety, environmental health and many more. A great way to keep track of what to do and how to do it correctly is to use risk management software.

Now I know what your thinking 'well that's all very well and good but what about cost time to install etc' and you'd be right. The truth is ignorance of a risk is no excuse, and will not prevent it from wiping out a business. It's a reality that must be faced and if your not doing something to try and manage these types of issues and present them if questioned you are at risk. However there are also a number of different techniques that can be used in business as mentioned earlier depending on what type of business you run.

The first risk analysis technique. Event tree analysis or ETA as it's commonly known. ETA is a large scale risk analysis of everything and all that could happen whether it is running smoothly or if anything goes wrong and how to deal with that. What to do in that situation and the safety procedures necessary to deal with this. This could be a oil tanker spillage, (huge right) or as small as say a wet patch on a slippery surface.

Risk Management Methods and Techniques

I'm now moving on to another (of many) technique of risk analysis. RAM or Risk assessment matrix. RAM is simply a large spreadsheet type matrix that notes all in a risk assessment. Firstly you find the companies processes and functions. After this you list and find which is the most essential to your business. Then you research what you would ave to do to replace anything if they were to go wrong. Find anything that could jeopardise the supply of these or if you can get them anywhere. Finishing up with finding how to deal with these problems.

Finally I'm moving into the software's that you can find and companies that deal the situations for you. There are many different software's out there that are right for any business but there are a few things to look out for on purchase. One thing your software should do is report and monitor any routine practices and incidents at work. you should be able to view COSHH and RIDDOR guidelines, policies and procedures and report any hazards. As well as this any EAP emergency action plans and NOP normal operating procedures should be able to be recorded.

If this all seems too much then never fear there are companies available that will do all the grunt work for you. Cost is a factor indeed however liability is removed from you and it save you a lot of time. The company you decide to go with should be a well established group, you don't want to get this wrong so do a bit of research before you decide to with them.

Risk Management Methods and Techniques
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