Free Custom «Risk Management» Essay Paper

Risk can be defined as the likelihood of occurrence of something that affects an individual or an institution’s objectives. Individuals or institutions have outside or inner factors that make them more susceptible to risks. There are various types of risks such as pure risk, speculative risk, diversifiable risk, and enterprise risk. All these types of risks are unique in their own way and they demand different risk management approaches (Taubenbock, et al, 2008). Applying an insurance policy is one way of managing risks although there are many other known risk management methods.

Risk management is a systematic process that involves setting goals that help to guide the entire process. Clear definition of goals helps to define the right context of managing risks. Secondly, identification of risks is done by looking at their probable causes as well as impacts. Afterwards, the risks are analyzed to determine their effectiveness as well as their probability of occurrence and outcome (Taubenbock, et al, 2008). The next step in risk management involves evaluation of risks to determine whether they are acceptable or not. Acceptable risks are scrutinized and then reviewed from time to time so that they stay acceptable. On the other hand, those that are not acceptable are treated in the most suitable way (Great Britain: National Audit Office, 2004). Various risk treatment strategies are applied such as minimizing the possibility of its occurrence, or minimizing the outcome of its occurrence. Other strategies include transferring as well retaining the risk. Furthermore, risks are treated by withdrawing activities that cause it.

 

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Remote sensing is used to assess risks and management of collisions between planes and birds. Radar is used to discover the presence of birds irrespective of whether it is at night or during the day. When birds collide with wind turbines or airplanes, they can cause a lot of harm and even sometime leading crashing of the plane. A signal sent from the plane hits the birds and the time taken for the echo to reach the plane helps to estimate how far the bird is from the plane (Great Britain: National Audit Office, 2004). Therefore, early detection of presence of birds helps to prevent occurrence of such incidences. At short distances, echoes from insects can be misguided for those from birds. As a result, vertical scanning method is used since it is less affected than horizontal one at low altitudes.

Every consequence of a risk is accompanied by a proportionate amount of uncertainty. As a matter of fact, uncertainties and assessment of outcome of risks go hand in hand (Great Britain: National Audit Office, 2004). In most cases, uncertainty is used as an aspect of defining risk such that, the higher the level of uncertainty, the higher the risk. This is very important during decision making process. For instance, in the business field, opportunities that have the highest amount of measurable risk translate to higher returns.

Judgments made by individuals about a perceived risk depend on the qualitative features of the risk as well as demographic qualities such as age, attitudes or socio-cultural inclinations. For instance, people are likely to consider incidences that are less familiar to them as more risky than those that occur frequently (Great Britain: National Audit Office, 2004). Also, incidences resulting from natural calamities are more risky than those that are man made. On the other hand, gender, social status, personality and age are among the demographic factors that influence risk perception.

Natural disasters such as floods, cyclones, high temperatures, and droughts among others, cause a lot of destruction due to the level of risk involved (Taubenbock, et al, 2008). Changing one risk for another complicates the whole process of hazard management on natural calamities. Every type of natural disaster is managed in its own way and therefore, the impact of changing risks is immensely high. Changing risks also results to ineffectiveness in mitigation of the hazards. Consequently, destruction from these natural disasters becomes immeasurable. Identification and application of the right mitigating factors for the disasters help to minimize the level of susceptibility of target people.