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 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; can include both theft of merchandise and theft of cash

Business Risks,

are specific to the type of business or organizational structure; generally greater when a business first begins operation; are of great importance to entrepreneurs and business owners

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

Economic Risks,

caused by changes in overall business conditions; result from a negative shift of the nation's economy

Human 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

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, damage or any undesirable event; not the same as uncertainty

Intangible Risk Management,

identifies a risk which has a one-hundred percent probability of occurring but is ignored by the organization due to a lack of identification ability

Speculative Risks,

innate business risks; can be predicted; occur when there is a chance of either a profit or loss

Taxonomy-based Risk Identification

,breaks down and groups risks into categories based on previous experience and knowledge

Source Analysis

,identifies whether the risk is internal or external and the potential target of a risk

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 the environment, include volcanic eruptions, hurricanes, earthquakes, tornados, tsunamis, etc.

Financial Risks,

specific to an entrepreneur's business; involve the financial state of a business; are the only risks which can reap a reward

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