Risk Management Assignment : La Perla coffee shop

Added on - 29 Apr 2021

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Introduction:The method of recognising, evaluating, and managing risks to an organization'sresources and profits is known as risk management. These challenges or hazards mayarise from a range of causes, such as financial volatility, legal obligations, strategicmanagement mistakes, incidents, and natural disasters. IT security vulnerabilities anddata-related risks, as well as risk control techniques to reduce them, have risen to thetop of the priority list for digitized enterprises. As a result, businesses' mechanisms fordetecting and monitoring risks to their digital properties, such as confidential businessrecords, a customer's personally identifiable information (PII), and intellectual property,are gradually being used in risk management programs. Any corporation andorganisation faces the possibility of unanticipated, damaging incidents that might costthem revenue or force them to close permanently. Risk assessment enables businessesto brace for the unexpected by reducing risks and additional expenses before theyoccur.An company can save money and secure the prospects by adopting a risk managementstrategy and considering the multiple possible threats or incidents before they arise.This is because a solid risk control strategy would assist an organisation in establishingpolicies to prevent future risks, mitigate their effect if they do exist, and deal with theconsequences. Organizations will be more secure in their strategic choices if they canconsider and manage risk. Furthermore, sound corporate governance practices thatemphasise on risk control will assist an organisation in achieving its objectives.Literature review:The probability theory and decision-making under uncertainty are the foundations of riskassessment. The predicted utility principle, the theory of bounded rationality, andprospect theory, in particular, had a big impact. The concept of expected utility theorystates that people make decisions dependent on the expected utility of various options.The theory of bounded rationality notes that in the physical world, multiple outcomesand their probabilities are difficult to comprehend. Prospect theory aids in simulating theimpact of human experience on decision-making. (Misra, & Kumar, 2006).1
The art and science of recognising, assessing, and reacting to risk over the life of aproject in the best interests of achieving project goals is known as project riskmanagement (Schwalbe,2006).Since the beginning of time, risk assessment has been done informally by all, whetherthey are aware of it or not. Modern risk management, which came to prominence as acommonly recognised management function between 1955 and 1964 (Snider, 1991),has its origins in insurance, with which it has been closely connected for more thanthree decades. Risk assessment hasn't always been a happy tale, and research showsthat it's currently unsuccessful at coping with unpredictable incidents. Projectmanagement was heavily chastised in the 1960s for failing to deliver projects due totechnological complexity, contact strategy, citizen resistance, and project environmentalimpacts (Morris, 1997). A project manager can also contend that the last two areexternal project considerations that are outside their direct influence (Ibid), and it isgenerally believed that these would be moved up the chain to higher managementlevels (Chapman & Ward, 1997).The main objectives of risk management include (Yee et al., 2001):To allow for more organised and less discretionary decision-making.By assessing threats and solution situations, a better view of the risks that aproject faces can be gained.To assist in determining which threats demand immediate intervention and whichcan wait.To let managers aware that a project will have a variety of effects, and thatreasonable action can be taken to mitigate any negative repercussions.Methodology:This research follows the descriptive approach. We concern study risk managementthrough collecting data from previous studies and literature. We will give furtherapplication risk management applied on a project in the discussion.2
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