Business Development: Risk Management Terms and Definitions

This document provides definitions and explanations of key terms relevant to business development, risk management, and workplace health and safety (WHS). It covers a wide range of concepts, including the AS/NZS ISO 31000:2009 standard for risk management, duty of care, WHS policies and regulations, risk management plans, and the hierarchy of controls. The document also defines important elements such as likelihood, consequence, stakeholders, and various audit types (external and internal). Furthermore, it explains legislation, including the WHS Act 2011 and related regulations, as well as the concept of harmonization in the workplace. Each term is clearly defined and illustrated with relevant examples to enhance understanding. This resource is designed to provide a comprehensive overview of essential business and risk management terminology, making it valuable for students and professionals alike.

Terms and definitions

Running Head: Terms and definitions
Terms Definition Explanation
AS/NZS ISO 31000:2009
Example:
This is the standard of the risk
management frameworks and
programs and this provided
the guidelines at the time of
risk management
development. This is defined
as the guide of implementing
the risk management process.
AS/NZS ISO 31000:2009 can
help to achieve the confidence
and trust of the stakeholders,
organizational resilience,
reliable decision making,
planning and the proactive
management. All these
guidelines are general
principles of the risk
management.
This standard is mainly used by the fund member agencies.
Except them these can be used by the many other private or
community enterprise, association, group or individual.
Therefore, ISO 31000:2009 is not specific to any industry or
sector.
Duty of care This term is defined as the
legal obligation which ensures
the safety and well-being of
the employees. This is
imposed by the individual or
any other organization. The
organizational policies and
procedures of the companies
The main motive of this
obligation is that organization
avoids those actions that harm
the other people working in
the organizations. The safety
and the care for the employees
are important to increase their
performance and productivity.
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Running Head: Terms and definitions
Example: include the duty of care as a
responsibility of the
organization.
It can be applied by the directors, accountants, auditors,
manufacturer to make sure about the standard of care fulfill
their duties.
WHS policy
Example:
Work health policies are the
commitments that the
management or the
organization does in the favor
of the health and safety of the
employees working in the
organization. The WHS
policies are regulated by the
organization and the state
government to control the
risks in future.
WHS policies in the
organizations are used to
remove or minimize the risks
associated with the health,
safety and welfare of the
workers. The WHS policies in
the organization retain the
employees for the long period
of time because employees
will feel secure and safe in the
organization.
This policy is applied in the big organization and covering the
health of the employees working in the organization such as
contractors, agents, consultants and staff.
Risk management plan Risk management plan is the
document prepared by the
It consists of the risk
assessment matrix and it
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Running Head: Terms and definitions
Example:
managers that includes the
risks, their impact and the
definition of the responses to
issues. This is the clear fact
that risks cannot be eradicated
completely, as they can be
mitigated, reduced or accepted
by the organizations.
includes the four different
ways to handle the risks.
These four ways are, avoid,
mitigate, transfer and accept.
Risk management plans are
used to save the companies
from the future losses.
When you are planning any project, it involves the uncertain
events which need to be managed by the project manager.
Likelihood The likelihood is defined as
the probability of an event
happening. This is the
informal way of discussing
about the situation that may
take place and may be
influenced by the factors not
observed yet.
Likelihood is the frequency
levels in the process of the risk
assessment processes. These
are also helpful in managing
the risks as these likelihood
tells the frequency of the risk
level that affect the objectives
of the company.
A person applying for a job, but having a criminal record will
minimize the likelihood of getting the call from the job or any
job offer letter. Likelihood in this example is like the chance of
the achieving goals.
Consequence The consequence is defined as
the effect, result, or the
However, the Consequences
of the risk identified are
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Running Head: Terms and definitions
Example: outcome of the event that is
occurring earlier. The
consequence in the terms of the
risk management can be
positive or negative.
helpful in the evaluation as
well as the risk
implementation processes.
The organization can analyze
the criticality of the projects
or the events through the
consequence.
The organizations act on the
consequences of the risks
rather than the type of risks
or nature of the risks.
The performance of the employees is low because of the
negative environment of the company. However the negative
environment is the risk and low performance is the consequence
Hierarchy of controls
Example:
A Hierarchy of control is the
way of determining effective
and feasible solutions for
controlling the occupational
hazards in order to protect the
workers from the risks.
This hierarchy of controls
involves the various steps
such as the PPE (personal
protective equipments),
administrative controls,
engineering controls,
substitution of the hazards
and elimination of the
hazards. These hierarchies of
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Running Head: Terms and definitions
controls are used by the
organization to create
healthier, better and safer
workplace.
The change in the process of production to avoid the wastage
and the chemical omission that has a bad effect on the health of
the employees working in the workplaces.
Manage risk The process of the management
of the risks involves the
identification, assessment, risk
prioritization of the risks. These
are defined as the effect of the
uncertainty on the objectives as
per the ISO 31000, which is
followed in order to avoid,
monitor and reduce the impact
of the uncertain events and to
maximize the productivity in
the organizations.
In the terms of the finance,
the management of risks
involves the identification of
the potential risks, risk
analysis and the taking the
preventive steps in order to
reduce their negative effects.
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Running Head: Terms and definitions
When an organization is planning to invest their money, then,
number of financial risks associated with this decision. This
can be managed by the implementation of the risks
management plans.
Stakeholders
Example:
Stakeholders are the persons or
individuals who can or affected
by the policies, actions of the
organization and objectives. A
stakeholder in the organization
can be internal and external to
the business. These
stakeholders are in the vice
versa situation where they can
affect the business and also can
affected by the business.
Stakeholders have the high
interest and great impact on
the business. It is difficult to
control the external
stakeholders such as,
government, competitors,
unions and other legislations.
Example: Stakeholders in the
business are the creditors,
directors, employees,
government, unions,
suppliers and the other local
communities.
Analyze risk
Example
Risk analysis helps to
understand the risks. Risk
analysis the sources of risks,
nature of risks, results and
impact of them to
Risk analysis find out the
reason and understand that
factors that how frequently
the risk happened and their
impacts. Risk analysis
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Running Head: Terms and definitions
organizational performance,
whether it is positive or
negative. This information
helps to plan the better risk
management plan for the future.
In risk identifications that affect
the consequences should be
identified.
calculates the risk from its
factors and report to the
organizations. Risk analysis
is the important part of the
risk management process
which helps the organization
in taking decisions.
Monitoring risk
Example:
It is the process of tracking the
risks and then reviewing them
in the terms of their impact and
the consequences and execute
the risk response plans to
evaluate the effectiveness
through the risk management
process.
However, the risk monitoring
and control has the aim to
evaluate whether the
assumptions of the project
are valid or not, the state of
the risk, identification of the
contingency reserves.
The risk of the increase in the price of the US dollar and it
needs to be monitored by continuously checking the currency
rates and evaluate the possible outcomes with the new risks.
Communications matrix
Example:
This matrix is the assessment
tool which is used by the
organization to manage the
information and
Communication is the
process of the sharing and
transferring the ideas, plans
and the required information
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Running Head: Terms and definitions
communicating with the
relevant people in order to
create some changes in the
communication part of the
organizations. Risk
communication in the
organization is the significant
part of the risk assessment
process. The communication of
the risk management plans with
the stakeholders is important to
have the common
understanding of the
assumptions and processes that
are used in the process of the
risk assessment. Moreover,
these matrixes are utilized to
see the progression in the
communication skills of the
employees.
from one person to another.
Therefore, the
communication matrix is the
document consists of the
communication management
plans for the specific project.
Communicating about the risk management plans with the
stakeholders by sharing this matrix.
External auditors External audits mean the The external audit is the
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Running Head: Terms and definitions
Example: analysis of the external factors
that have a great impact on the
working of the organization.
The external audits consider the
factors that cannot be
controlled by the organizations
and the external auditors are
also from outside the firm.
assessment of the risks that
are identified externally such
as the customers,
government, legislation and
the local communities. This
is a regulated activity and
helpful in taking the
decisions in the organizations
Example of the external audit is the analysis of the annual
reports that are being misstated materially. These audits help in
risk controlling and monitoring.
Internal audits
Example:
Internal audits are the opposite
of the external as these are the
assessment of the risks within
the organizations and the
internal auditors are employed
by the business.
These types of the audits are
set internally in order to
analyze the risks related to
the business objectives and
the strategies. Internal
auditing is an independent,
objective assurance and
consulting activity designed
to add value and improve an
organization's operations.
To analyze the occupational health standards in order to create
value for the stakeholders and to retain the employees.
Legislation Legislation is the laws that The legal definition of the
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Running Head: Terms and definitions
Example:
build by the government of the
country. Every law has the
motive and it is enacted by the
government to control the
future risks
legislation is the process of
the enactment of the bills into
the law. The legislation of
the countries is different in
nature. Every country has
their own laws and
regulations.
The government sets a rule for the import and export of the
business. The trade policies and the government legislation
applied by the country to control the future risks and to avoid
the negative impact of the risk.
WHS Act 2011
Example:
This act provides the legislation
for the work health and safety
of the employees and also this
act is the amendment of
workers’ rehabilitation and
compensation act 2003 for the
specific purposes.
The main objective of this act
is to provide the balanced
framework to all the workers
in the context of the safety
and health of the workers.
Moreover, providing fir and
effective working
environment is the another
motive of this act.
Provide full protection to the workers from the accidental injury
at the time of work
WHS Regulations Work health and safety
regulations are some of the
WHS regulations are the
standards used to promote
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Running Head: Terms and definitions
Example: standards set to meet the risks
and analyze the workplaces.
This analysis is done to provide
the advices, handing over the
notices and penalties wherever
necessary. The WHS policies
are regulated by the
organization and the state
government to control the risks
in future.
the fair practices. The safety
laws and the work health
regulations are imposed by
the regulating agencies.
These regulations are helpful
in giving the overview to
make the workplaces
healthier and safer.
OHS
Example:
OHS stands for the
occupational health and safety.
According to this law, the
organization must ensure the
safety, compensation and
rehabilitation system. These
regulations are advantageous in
case the worker injured at the
work.
This OHS policy is
concerned with the
occupational health of the
people working in the
organization and protects
them from the possible future
harm. However, it is
important to analyze the
occupational health standards
in order to create value for
the stakeholders and to retain
the employees
Offering accidental insurance to all the workers who perform
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Running Head: Terms and definitions
the risky tasks.
Harmonization
Example:
Harmonization is the process of
giving the equal treatment to all
the employees working in the
same company. It involves the
rules regarding the pay,
timings, working hours and the
rights.
In the context of the global or
international, the
harmonization is the process
of making similar laws in the
different countries and
companies in order to make
the work easy for the
employees.
The export companies want the harmonization in the terms of
the laws and regulations between the America and European
union.
Work Cover
Example:
Work covers are the injury
claims. There are many
organizations offering the
advisory services in order to
improve the work health and
safety. The license and the
registrations of the dangerous
work is the one of the key
regulations.
The work cover is the
support to the employees
from the different companies
and countries side as to get
the maximum productivity
from the employees. The
insurance covers are of many
types which are given to the
workers on the basis of their
work and the level of risk
they are facing.
For example: The accidental insurance, fire insurance and
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