The issue of risk assessment and monitoring in organizations is currently one of the most underrated issues in the field. There are numerous reasons behind this complex issue such as secretarial and governance failures, scams, and organizational control breaches (Sadiq and Graham 35). More importantly, individuals within most organizations believe that these risks will not impact their organization’s state of affairs.
On a bigger scale, the global effect of these risks relates not only to the outcomes and amenability of these risks. Risk managers should also bear in mind tactical and procedural risks (Boholm and Corvellec 182). Improved business premeditated agreements and corporate partnerships also generate increasing risk interdependencies. Even though commonly used risk management methods have improved in quality, insufficient risk recognition in numerous organizations has failed to entirely assimilate acknowledged risks into tactical and procedural decisions.
Types of Risk Management in Organizations
There are several types of risk management in organizations. Enterprise risk management is a tactical agenda that is utilized to evaluate the latent risks that have negative effects on an organization. These risks include the complications involving organizational assets, services, and products provided by the organization, and even the marketplace background in which the organization functions. Another type of risk management is called operational.
This type of risk is present in every organization and recurrently transpires because of the implementation of the corporate roles of the organizations. Therefore, organizations have to evaluate these risks and formulate strategies to mitigate the adverse effects of risk (Al-Tit 45).
Habitually, operational risk management is designed to handle risks connected to human errors and practical failures. Another type of risk management involves the financial state of the organization. It can be demarcated as a method of minimizing the organization’s exposure to the marketplace and debt risks by utilizing several financial tools. Financial risk managers similarly take care of other risks related to liquidity, price increases, and non-paying customers (Corvellec 150). This type of risk impacts the economic state of the organization.
Top Risks in Organizations
One of the top risks in organizations is information security. This is because the majority of organizations are now heavily dependent on information technology, but, despite investment in technological strategies, computer drills, and data processing safety employees, critical data breaches and events connected to IT continue to transpire (Thalmann et al. 30). The risks should be perceived as complex because more than 90 percent of workers confess to disrespecting their organization’s security rules.
Another important organizational risk is digital marketing. Innovative online marketing methods can make the field more agile, oversensitive, and isolated. Nevertheless, another drawback is a minimized ability to prevent communication errors, and these mistakes can bring serious reputational damage and aggravate risks associated with data privacy and information security (Thalmann et al. 33). Another top risk in organizations is compliance management. An excessive number of new protocols and executions subject to improvement still presents a challenge for the majority of organizations. The risk can be increased by the necessity to certify that recently attained standards or assets are yielding results.
Importance of Risk Management in Organizations
For any organization, proper risk management is rather important. The issue lies in the fact that, without it, organizations will not be able to achieve their corporate objectives (Mikes and Kaplan 347). Moreover, organizations should carefully approach and assess the variety of existing risks. This should be done to prepare the organization for situations in which risks can hurt the company and its employees (Mikes and Kaplan 349). Therefore, the key objective of risk management in an organization is to guarantee that the company only exposes itself to the risks that will help achieve the organization’s initial targets while carefully managing all other risks.
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