ICIMP-2018 ISSN: 2455-3085 (Online)

SEP- 2018 RESEARCH REVIEW International Journal of Multidisciplinary

Special Issue www.rrjournals.com [UGC Listed Journal]

Risk Management
1 2
Mr. D. Praveen Kumar & Ms. Sharon Joji
1
Associate Professor Department of BBA Bishop Appasamy College of Arts & Science, Coimbatore, Tamil Nadu (India)
2
II BBA Bishop Appasamy College of Arts & Science, Coimbatore, Tamil Nadu (India)

ARTICLE DETAILS ABSTRACT

Article History Risk is a combination of both, the probability of a bug to happen in production and the art of
Published Online: 03 Oct 2018 understanding the impact for the customer. As is with lots of such decisions, people might
have different views on the impact depending on how well they understand the customers'
Keywords needs.
Risk Management

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Corresponding Author
Email: sharnann16[at]gmail.com

1. What is risk management? Post Loss:

 Risk is an uncertain event that may have a positive or  Survival of the firm.
negative impact on the project.  Continue operating.
 Stability of earning .
 Risk Management is the process of identifying and  Continue growth of the firm.
migrating risk.  Minimize effects that a loss will have on other persons
and society
 Risk is a combination of both, the probability of a bug
to happen in production and the art of understanding 5. Identifying the loss exposure
the impact for the customer. As is with lots of such  Property Loss Exposure
decisions, people might have different views on the  Liability Loss Exposures
impact depending on how well they understand the  Business Income Loss Exposures
customers' needs  Human Resource Loss Exposures
 Crime Loss Exposures
 Employee Benefit Loss Exposures
2. Types of risks:
 Foreign Loss Exposures
I. Objective Risk
II. Subjective Risk There are five methods of identifying loss exposures.
 Risk Analysis Questionnaires
Objective Risk:
 Physical Inspection
It is a variable of actual loss from excepted loss.  Flowcharts
 Financial Statements
Subjective Risk:  Historical Loss data
Based on persons mental conditions or state of mind.
6. Analyze the loss exposure
3. Why it so important?
It involves estimation of frequency & severity of loss.
 Risk affects all aspects of your project – your budget,
your schedule, your scope, the agreed level of quality, Loss Frequency:
and so on  Probable number of losses that may occur during
 Increase probability of positive event some given time period.
 Reduce the occurrence of negative event.
Loss Severity:
4. Objectives of risk management:
 It refers to the probable size of the losses that may
Pre Loss: occur.
 The firm should prepare for potential losses in the  Select appropriate techniques for treating the loss
most economical way. exposures.
 Reduction of anxiety  It broadly consist of two techniques.
 Meet any legal obligation.

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Special Issue Sep-2018 Host Institute: Department of Commerce, SANKARA College of Science & Commerce, Coimbatore

7. Risk Control It refers to the techniques that provide funding of losses

after they occur.
It describes techniques for reducing the frequency or
severity of loss.
Retention :

Avoidance: It means that the firm retains part or all losses that can
result from a given loss. It can be either active or passive.
It means a certain loss exposure is never acquired , or an
existing loss exposure is abandoned.
Noninsurance Transfers:

Loss Prevention: Noninsurance transfers are methods other than insurance

by which a pure risk and its potential financial consequences
It refers to measures that reduce the frequency of a
are transferred to another party.
particular loss.
Commercial Insurance:
Loss Reduction:
Commercial insurance is also used in a risk management
It refers to measures that reduce the severity of a loss program. Insurance is appropriate for loss exposures that have
after it occurs. a low probability of loss but for which the severity of loss is
high.
8. Risk Financing

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