Risk And Uncertainty Flashcards
What is risk?
A decision with an leant of uncertainty
What is a quantifiable risk?
Likelihood of predictable risk occurring
Whats an unquantifiable risk?
Risks that are unexpected - not possible to place value on it
Whats a calculated risk?
A risk that has bee given thoughtful consideration and potential costs and benefits have been weighed
How can risk be responded to?
Ignore it
Share/ deflect risk
Make contingency plans
Embrace risk as opportunity
What is opportunity cost?
The cost of the next best alternative foregone. The opportunity cost of planning = time could’ve been spent elsewhere
What is a contingency plan?
Planning for an unexpected event or outcome that would have catastrophic consequences
What is the aim of a contingency plan?
To minimise the impact of a significant foreseeable event
What does contingency planning involve?
Identifying what and how things might go wrong
Understanding potential effects if things go wrong
Devising plans to cope with threats
Putting in place strategies to deal with risks before they happen
Whats an example of contingency planning?
Marketing - extensive research
Operation - holding spare capacity
What is crisis management?
The process by which an organisation deals with an event that threatens harm to the business and stakeholders, usually straight after the event. (Putting contingency plan into operation)
What three elements are involved in an effective response to a crisis?
1) operational response - implement contingency plan, minimise impact on stakeholders
2) communications response - contact key stakeholders
3) management response - assess crisis severity, contact senior executives, oversee implementation
