Risk management

Question 1

What are 8 examples of risks ?

Answer 1

1. Natural disasters
2. IT systems/equiment failures
3. Employee error
4. Supply problems
5. Economic factors
6. Legal challenges
7. PR or product failures
8. Loss of key staff

Question 2

What does the 5 things does risk depend on ?

Answer 2

1. Geographical location
2. Market or industry
3. Whether goods are imported/exported
4. Level of investment capital
5. Skills of staff

Question 3

What is a risk assessment ?

Answer 3

Systematic process of evaluating potential risks that may be involved in a future situation

Question 4

What 3 factors does risk assessment help with ?

Answer 4

1. Identify issues that can cause harm
2. Analyse and evaluate risk
3. Find ways to eliminate, reduce or control risk

Question 5

What are the 3 preventative actions ?

Answer 5

1. Install water sprinklers to reduce fire
2. Back up IT data
3. Train employees to deal with specific identified tasks

Question 6

What are insurable risks ?

Answer 6

Fires, thefts and loss of profits

Question 7

What are uninsurable risks ?

Answer 7

Higher unemployment, changes in economy

Question 8

What is a contingency plan ?

Answer 8

A plan that takes into account possible future events or circumstances that may affect the business

Question 9

What is scenario planning ?

Answer 9

Structured way to think about future by considering possible futures and plan a course of action

Question 10

What 4 issues can contingency plans deal with ?

Answer 10

1. Need for contingency funds
2. Alternative production arrangements
3. Allocate responsibilities to managers/employees
4. Dealing with PR

Question 11

What ways can a business respond to potential risks ?

Answer 11

1. Business continuity planning
2. Succession planning

Question 12

What is business continuity planning ?

Answer 12

Sets out how business will operate following an incident and how it expects to return to usual asap

Question 13

What is succession planning ?

Answer 13

Identifying and developing staff with the potential to fill key business leadership positions

Question 14

What are 3 advantages of contingency planning ?

Answer 14

1. Minimise losses by identifying risks in advance
2. Prevent panic and poor decision making
3. Forced to think in great detail

Question 15

What are 5 disadvantages of contingency planning ?

Answer 15

1. Costly and time consuming
2. Need to be constantly updated
3. Staff need to be involved and trained
4. May be more cost effective to avoid risks completely
5. May not cover risk its designed for