With businesses operating under uncertainties in these tough economic times, companies and organizations have had to shift their methods of operation. Companies which originally would operate smoothly based on forecasts and projections have had to refrain from making business judgements which are set on stone. The companies now have a renewed focus: how to manage risk. Risk ranks as the number one cause of uncertainty in an organization (Erich, 2013). Thus, companies are increasingly dedicating more resources in the identification of risks and consequently managing them before they affect the business, YieldMore is no exception. Prudent risk management helps companies act more confidently on future business decisions. The knowledge of the risks likely to affect the business helps the company with various options on how to adequately deal with potential problems.
Risks can originate from within the company (internal) or from without the company (external). External threats are those that are not in direct control of the management which include but not limited to exchange rates, political turmoil, climatic changes, and so on. Examples of internal risks, on the other hand, include information breaches or non-compliance to legal requirements, among many others. Risks are important to any organization or company because, without risks, firms find it hard to define their objectives for the future. Likewise, if a company sets out objectives without factoring in risks, chances are that they will be hard hit when the risks hit home. Risk management is closely tied to a company’s financial standing (Illinois, 2012).
Risk management in a company is a management committee responsibility. The management committee carries with it the legal and ethical responsibilities for what happens within the organization they govern. As a first step, the committee usually forms a small working group assigned the role of developing a risk management plan. While the working group carries the task of developing the plan, the management committee oversees the process and makes the final decisions in the implementation of the plan.
Review of and the team responsibilities in the development of the plan.
The team I am working with at the YieldMore company has an overall job of development of a plan which identifies risks and outlines mitigation actions throughout every project cycle. Over and above coming up with the plan, we shall be updating the risk management plan periodically and expanding it throughout the projects just to be sure that it encompasses every aspect of the company over which a risk could attack YieldMore. Also, the management requests that we identify possible points of future risk attack.
The team will also be actively involved in the evaluation of the probability of each risk identified occurring as well as estimate the possible (positive and negative) effect and the associated cost of the project and activities (Erich, 2013). To enable us to achieve this, we will use the retrospective risk assessment methodology to have a look at past incidences (if any took place) and compare and contrast with similar present situations to help in the developing of risk probability estimates and cost estimates. The methodology will also help in the identification, and use of the lessons learnt as well as the consideration of public reaction during those past occurrences. Contrastingly, if there are no similar threats identifiable after conducting a retrospective risk assessment methodology has been carried out, the team will resort to strategic risk management tools and assessment methodology to evaluate the risks (Sauvage & Haouari, 2012). The team will use the results to identify priority areas of concern for the risks which are most likely to occur and are most costly when they happen. Such will get high priority, and such a chart will help us grade the risks regarding priority (high or low).
Specific Roles of Members
The senior management decided that I would be the overall head of the working risk management team. I would be responsible for the success of the risk management plan, leading the risk management effort from the ground. I would be the link between the team and the senior management which has requested for the development of the plan, facilitating communication between ourselves and the executive management. Over and above been the to go guy, I will be working in a team, so the team has specific roles. One main specific role which we shall play will be identification and listing of all possible risks which can affect the operations of YieldMore. These risks shall be shared with the senior management just to be sure we are reading from the same page and that we get the management’s approval. We shall also be required to draw the budgetary expeditions of the planning process and mitigation budgets. We shall also advise on risk mitigation strategies by way of drafting feasible recommendations. This usually comes at the end of the risk management plan drafting before the plan is handed over to the project manager and executive sponsor to kick off the implementation phase of the mitigation strategies outlined (Xu, Hua, & Xu S, 2011).
Erich, J. (2013). How to manage your risk: The biggest threats to EMS providers – and what we can do about them. Ems World.
Illinois. (2012). Risk management plan data elements. Springfield, Ill.: Illinois Environmental Protection Agency.
Xu, D., Hua, X., Xu, S. (2011). Risk Management and Evaluation in Project Life Circle Based on the Sodor Oil Terminal Case Study. 4, 85-88.