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