Risk Management
Risk Management
a prioritized process in which the risks with the greatest loss and the greatest probability of occurring are handled first, and risks with a lower loss are handled in descending order
Risk Avoidance
allows a business to decrease risk by completely avoiding risky activities
Risk Reduction
allows a business to take steps to prevent a risk from occurring
Risk Assessment
allows the identified risks to be ranked by their potential severity and the probability of occurrence; produces information which prioritizes the risks facing a business
Employee Theft
also referred to as internal theft; includes theft of merchandise and theft of cash
Taxonomy-based Risk Identification
breaks down and groups risks into categories based on previous experience and knowledge
Controllable Risks
can be prevented or reduced in frequency
Uncontrollable Risks
cannot be prevented or predicted; are the most devastating form of risk for most businesses
Risk Charting
combines all of the risk-checking methods; creates an in-depth look at potential risks and risk sources associated with a particular business
Risk
considered an indicator of a threat, the possibility of loss damege or any undesirable event, not the same as uncertainly
Source Analysis
identifies whether the risk is internal or external and the potential target of a risk
Speculative Risks
innate business risks; can be predicted; occur when there is a chance of either a profit or loss
Common-risk Checking
involves the use of a pre-made list which describes the common risk associated with a particular type of business
Scenario-based Risk Identification
involves the use of scenarios to create alternative ways to achieve an objective; any event in the scenario triggering an undesired scenario alternative is identified as a risk
Risk Retention
means a business assumes or accepts the responsibility for the negative results of a risk; generally used when a risk cannot be insured or the known loss of a risk will be extremely small
Pure Risks
occur when there is a possibility of loss, but no chance of gain
Natural Risks
risks associated with environment, include volcanic eruptions, hurricanes earthquakes, tornados, tsunamis, fires
Economic risks
risks caused by changes in overall business conditions; result from a shift of the nations's economy
Human Risks
risks caused by human mistakes as well as by the unpredictability of consumers, employees and the work environment; occur in the areas of security and safety
Financial Risks
risks specific to an entrepreneur's business; involve the financial state of a business
Business Risks
risks specific type of business or organizational structure; general greater when a business first begins operation; of great importance to entrepreneurs and business owners
Vendor Fraud
the easiest way for someone to steal from your business undetected; causes loss of inventory due to falsifying records, delivering fewer items than were ordered, delivering smaller items than were specified
Risk Transfer
the most common method of risk management; involves transferring the risk to another individual or entity; often involves purchasing insurance which covers the potential risk
Objective-based Risk Identification
used in organizations which have specific goals and objectives; identifies any event which might endanger achieving one of the objectives