Risk Management Concepts and Principles PDF

UNIVERSITY OF SOUTHERN MINDANAO Risk Management Concepts and Principles THC 2 – RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITY, AND SANITATION  Learning Outcomes: 1.Discuss risk 2.Identify what is risk and hazard and what is the difference between t...

UNIVERSITY OF SOUTHERN MINDANAO Risk Management Concepts and Principles THC 2 – RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITY, AND SANITATION  Learning Outcomes: 1.Discuss risk 2.Identify what is risk and hazard and what is the difference between the two 3.Discuss the risk management principles 4.Examine the steps on risk management process as per ISO 31000 RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITTY, 2 AND SANITATION  RISK 1.According to UNWTO: Is a situation that exposes someone or something to danger, harm or loss. Risk can be physical safety matter, a risk of property loss, a financial business risk, and more. RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITTY, 3 AND SANITATION  RISK 2.Business Dictionary defined risk: The probability of threat of damage, injury, liability, or any other adverse occurrence that is caused by external or internal vulnerabilities, and that may be avoided through preemptive action. RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITTY, 4 AND SANITATION  RISK 3.In the point of view of economics Risk implies future uncertainty about deviation from expected earnings or expected outcome. Risk measures the uncertainty that an investor is willing to take to realize a gain from an investment. RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITTY, 5 AND SANITATION  Risk vs. Hazard Hazard - anything that can cause harm (chemical, electrical, ladders) Risk – how great the chance that someone will be harmed by the hazards RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITTY, 6 AND SANITATION  Risk Management Risk management, as defined in ISO 31000, is the identification, evaluation, and prioritization of risks. It is followed by coordinated and economical application of resources to minimize, monitor, and control the probability of unfortunate events (Hubbard, 2009) to achieve the desired output. RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITTY, 7 AND SANITATION Risk management helps employees to identify, analyze, assess, and hopefully, avoid or mitigate risks coming from a variety of sources, such as financial upset, legal ramifications, accidents, natural disasters, data or cyber security breaches, and many more. RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITTY, 8 AND SANITATION  Sources of Risk 1.Uncertainty in Financial Markets – one consideration that a manager should take into in the conduct of his or her business is the uncertainty in the financial markets. 2.Threats from project failures (at any phase in design, development, production, or sustainment life-cycles) – another source of risk that could hamper the success of the tourism and hospitality business is the threat usually embedded in the project. As a manager, you cannot just avoid the threat you have to deal with it. RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITTY, 9 AND SANITATION  Sources of Risk 3.Legal liabilities in Tourism and Hospitality Industry– as discussed, the risk may be defined as a potential loss or harm to persons and property. When applied to tourism and hospitality industry, it could be any of the following; financial loss, damage to property, or injury to workers or guest. 4.Credit Risk–credit is another source of risk that could impact the tourism and hospitality industries. RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITTY, 10 AND SANITATION  Sources of Risk 5. Accidents –risk and accidents are sometimes being used interchangeably, but they are different, though they complement each other. That arise during maintenance checks are quickly addressed. RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITTY, 11 AND SANITATION  Events of Uncertain or unpredictable Root-cause The strategies to manage risk typically include transferring risk to another party, avoiding the risk, reducing the adverse effect or probability of the risk, or even accepting some or all of the potential or actual consequences of a particular risk. RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITTY, 12 AND SANITATION  Two Types of events in Risk Management 1. Negative events or risk 2. Positive events or opportunities RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITTY, 13 AND SANITATION  Strategies to Manage Threats (Uncertainties with Negative Consequences) The following are some of the strategies that can be of help to manage threats: 1. Avoid the threat; 2. Reduction of the adverse effect or probability of the threat; 3. Transfer of all or part of the threat to another party; 4. Retaining some or all of the potential or actual consequences of a particular threat, and the opposites for opportunities (uncertain future states with benefits). RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITTY, 14 AND SANITATION  How to Implement the Strategies to Manage Uncertainties (Method) The different strategies of managing uncertainties can be dealt with using the following elements in order: 1. Threat identification or characterization; 2. Assessment of the vulnerability of critical assets to specific threats; 3. Risk determination; 4. Identification of the techniques to reduce those risks; 5. Prioritization of the measures RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITTY, 15 AND SANITATION  Risk Management Principles By the International organization for Standardization: 1.Risk management should create a value wherein the resources expended to mitigate risk should be less than the consequences of inaction 2.It should be an integral part of the organizational process 3.The risk management should become part of the decision-making processes 4.It should explicitly address uncertainty and assumptions 5.It should be placed in a systematic and structured process RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITTY, 16 AND SANITATION  Risk Management Principles 6.The best available information should be the basis of risk management 7.Risk management should be tolerable 8.It should take human factors into account 9.It should be transparent and inclusive 10.The dynamism, interactivity, and responsiveness to change must be evident on the risk management 11.Risk management should be capable of continual improvement and enhancement 12.There is a need for a continuous and periodic re-assessment of the risk management RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITTY, 17 AND SANITATION  Steps on Risk Management Process as per ISO 31000 The following are the steps for the implementation of the risk management process based on ISO 31000: 1. Content establishment 2. Identification of the potential risk 3. Risk assessment 4. Creation of risk options RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITTY, 18 AND SANITATION  Steps on Risk Management Process as per ISO 31000 5. Identification of potential risk management treatments 6. Make a risk management plan 7. Execute the plan RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITTY, 19 AND SANITATION An updated periodic management plan is needed because of the following reasons: 1.Determination of the applicability and effectiveness of the previous security controls 2.Understand the possible changes in risk level in the business environment RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITTY, 20 AND SANITATION  ASSIGNMENT (1 whole) - Make a possible scenario of problem that would likely to happen in our industry, and define what are the steps you are going to make to manage it. RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITTY, 21 AND SANITATION