Corporate Risk Management Hindrance Factors Term Paper

Pages: 2 (632 words)  ·  Style: Harvard  ·  Bibliography Sources: 0  ·  File: .docx  ·  Topic: Business - Management

Corporate Risk Management - Hindrance Factors

The most effective risk assessment occurs in a cognitive and quantitative fashion. Managers need to be aware of the precise levels of risks within their company in order to adequately manage these. Identifying and quantifying risks in a company are therefore vital aspects of the risk management process. Risk can only be adequately assessed once these actions are thoroughly carried out. All too often, however, ambiguity and subjectivity tend to compromise the risk assessment process.

Identifying risks is important, because this makes the manager of a company aware of what risks pose a danger to the company. If risks are hidden or unknown, the danger to the company in terms of liability, finances, safety and other areas of company functioning is increased. It is therefore necessary to identify as many risks as possible so that preventative measures are provided in plenty of time to minimize these risks.

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Ambiguity and subjectivity however pose the risk of compromise. Ambiguity means that a risk is not a certainty. There may for example be disagreement among management, or the risk assessment team, regarding the risks to be identified as such. Some may for example feel that certain risks are not sufficiently significant to be assessed as such. Others may feel that optimal safety is more important than financial gain in terms of mitigation strategies. In order to deal with such ambiguities, it may help to increase the number of entities involved in identifying risks. The increase of opinions will help to bring about a more objective view of what constitutes risks to be identified and what does not.

TOPIC: Term Paper on Corporate Risk Management Hindrance Factors Assignment

A further problem is that risk identification is often a highly subjective process, particularly if a single person or team works on the risk identification process. The problem is that an internal entity from the company itself may overlook existing risk factors. The reason for this… [END OF PREVIEW] . . . READ MORE

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"Corporate Risk Management Hindrance Factors."  Essaytown.com.  April 26, 2007.  Accessed October 26, 2021.
https://www.essaytown.com/subjects/paper/corporate-risk-management-hindrance/65096.