A. RISK MANAGEMENT

Risk Management Model (Full Steps)

Identify hazards → analyze likelihood + impact → prioritize risks → choose control methods (avoid, reduce, transfer, retain) → implement controls → monitor results and adjust

Enterprise Risk Management (ERM) Model

Set organizational goal → identify risks across all departments → evaluate severity + probability → choose treatments (avoid, reduce, transfer, accept) → monitor effectiveness → communicate results to stakeholders

Adapting RM Models to Organization Needs

Customize steps, risk categories, reporting style, control methods, and responsibilities based on company size, industry, and resources

How Risk Creates Value

Good risk management protects assets, lowers losses, improves decisions, increases stability, builds trust, supports long-term growth

Risk Program Creation Process

Define purpose → set policies → assign roles → choose measurement tools → develop procedures → train employees → set review schedule

Risk Forecasting

Use historical data, trends, probability models, and scenario analysis to predict future risk levels + potential losses

Risk Mapping

Place risks on a grid showing likelihood vs. impact to reveal priorities and gaps in protection

Risk Profiling

Describe each risk’s source, frequency, severity, warning signs, financial effect, and controls

Cost of Risk Components

Insurance premiums → uninsured losses → deductibles → administrative costs → safety programs → legal costs → downtime

Risk Control Theories (PRER Model)

Prevention (stop risk), Reduction (lessen intensity), Enablement (use risk for advantage), Enhancement (strengthen opportunity linked to risk)

Emergency Response Plan

Immediate actions for fires, injuries, disasters: communication steps, evacuation routes, medical response, roles

Business Continuity Plan

Plan to keep operations running after disasters: backups, alternate worksites, critical functions, recovery timeline

Risk Retention Plans

Organization accepts financial responsibility for losses through reserves, self-insurance, or high deductibles

Risk Financing/Transfers

Shifting financial loss to insurer or another party through insurance, contracts, hedging

Risk Management Reports

Detailed summaries of risks, controls, incidents, financial impact, recommendations, and progress toward RM goals

Legal Components in RM

Liability, negligence, duty of care, compliance requirements, regulatory standards, documentation rules

Insurance Recommended for Young Adults

Auto liability, collision, comprehensive; renter’s insurance; health insurance; basic life; optional disability coverage