Methods O f Handl ing R isks
C] Subcontracting – It is a method of managing proj ect risks by al l owing,
distributing the responsibil ity and potential l y reducing the impact of unforeseen
issues. It can be v al uabl e method for managing certain risks in proj ects,
particul arl y those rel ated to special ized ex pertise and fl uctuating workl oads.
4. Prev enting R isks – When risk can’t be av oided the effect of l oss can often
be minimised in terms of frequency and sev erity.
T echniques O f R educing R isks
I] Forecasting and marketing research
● It reduces the business risk by prov iding crucial insights into future
trends, customer behav iour and market conditions, enabl ing proactiv e
decision making rather than reactiv e responses.
● Forecasting predicts future sal es, financial needs and resources
Demands.
● Market research cov ers consumer needs, competitor strategies, etc. T he
pl anning is done by focusing both the concept.
II] R esearch And Dev el opment – T hese processes proactiv el y address the
technical , market, resource risks, improv ing proj ects success rates. It reduces
risks by identifying, assessing, reducing uncertainties through innov ation.
III] Credit Screening And Control
● It hel ps organisation to minimise financial l osses from borrower
defaul ts by identifying, assessing and monitoring a borrower’s
creditworthiness before and after ex tending credit.
● Credit Screening inv ol v es ev al uating potential borrower’s financial
heal th and credit history to determine if they are l ikel y to repay.
● Credit Control inv ol v es setting credit l imits, monitoring l oan
performance and managing col l ections to manage the risk of defaul t.
IV ] Safety Programmes
● Safety programmes are formal , structured approaches used to identify,
assess and control hazards, thereby , managing risks to acceptabl e
l ev el s within an organisation.
● It incl udes risk control measures, ongoing monitoring and rev iew and
the cul tiv ation of a strong safety cul ture through empl oyee inv ol v ement,
training and cl ear communication
● T he ul timate goal is to prev ent inj uries, il l ness and negativ e impacts on
the organisation by systematical l y reducing the l ikel ihood and sev erity
of potential hazards.
V ] T raining And Dev el opment of empl oyees - It is a crucial risk management
method because it equips empl oyees with the knowl edge and skil l s to identify,
assess and mitigate potential risks. It hel ps the empl oyees to reduce accidents
and other uncertainties in Management.
V I] Gov ernment R egul ation – It manage risk by establ ishing rul es, standards
and guidel ines to protect the publ ic from v arious harms, such as
env ironmental damage, financial instabil ity, heal th hazards and safety issues.
5. Mitigate R isks – R isk Mitigation is a method of risk management that
inv ol v es impl ementing strategies and control s to reduce the l ikel ihood of a risk
ev ent occurring or to l essen the sev erity of its Impacts if it does happen.
6. E x pl oit the R isk
● It incl udes two aspects – negativ e and positiv e risks. E x pl oiting risk
inv ol v es taking del iberate actions to ensure a positiv e risk (opportunity)
occurs and max imises its impact rather than j ust enhancing its
profitabil ity or accepting it if it happens.
● T his means acting to achiev e a specific desired outcome by conv erting
a potential benefit into a certainty, often by real l ocating resources,
adopting new approaches or securing partnerships to guarantee the
opportunities real ization.
Business Fail ure
It means a company ends its operations because it can’t generate enough profit
or rev enue to cov er its ex penses or meet its financial obl igations.
T ypes O f Business Fail ure – Fol l ow T ex t Book – Both Internal and ex ternal .