What is Risk Management?

[cybermoj]

Awsome tut...thanks man!

So, how is the size of the risk determined? Is that where softwares like Crystal Ball come in? If not, What is the function that crystal ball performs?

[panglimamerah]

Good analogy but i must address that when we are talking about risk management, it encompasses a very big scope. There are a lot of things that we might need to consider and put it into perspective. And to answer cybermoj questions, we need to look at proper "risk description". There are many standards for risk management which focused into same area of study but with different terminology. The first thing that we need to know is the description of the risk itself.

Risk can be categorized into three which known as hazard risks, control risks and opportunity risks. Hazard risks or pure risks are certain risk event that can only result in negative outcomes whether it is an operational risks or insurable risks. Notably, risk management discipline has strong origins in the management and control of hazard risks.

Risk Description is important as it will includes statement of the risk, including scope of risk & detail of possible event and dependencies. it will also covers the nature of the risk including details of the risk classification and timescale of potential impact. Risk impact in risk management is often describes into likelihood and magnitude.

From risk description we will determine the magnitude of the risk meaning how big is the risk impact to the organization. We are using risk assessment to determine the risk likelihood and magnitude. There are many risk assessment tools in the world which enable us assessing the risk thoroughly and subsequently providing a good information in dealing with the risk suitable to organization needs.