Risk management

Question 1

What is risk management?

Answer 1

A process that helps organizations protect/prevent themselves from thing that can go wrong in the company

Question 2

What is a risk?

Answer 2

The possibility that an event or situation may occur, which could negatively affect the achievement of goals or the success of a project.

• Combo of consequences of an event and the probability of it occurring

Question 3

There are 3 major steps of the risk management process, describe these a bit

Answer 3

1. Understanding scope and context of the organization
2. Risk assessment, includes includes identifying, analysing and evaluating risks

• For risk analysis and evaluation: the goal is to assess the potential impact of identified risks and prioritize them based on their likelihood and severity. Based on this, risks can be ranked from least to most critical, which helps in deciding which risks need immediate attention and which ones can be managed later. Also easier to update and have a clear overview of potential risks

3. Risk treatment: choosing methods to deal with risks. 4T!!!
4. Terminate
5. Treat
6. Tolerate
7. Transfer

Question 4

Lydia hade en fin bild för risk assessment, diskutera:))

Question 5

There are two main types of risks, what are these categories?

Answer 5

1. Operational risks: occur regularly and have low impact
   - Ex. bullwhip effect
2. Distraktions effect: occur infrequently but have high impact
   - Ex. natural disaster–> delays due to damage on port

Question 6

What is risk pooling?

Answer 6

A strategy that can be used to reduce the impact of demand uncertainty

• Involves centralizing inventory at a distribution centre (DC) instead of having several separate locations
• Reduction of SS-costs
• Easier to manage demand forecast and demand variance