Introduction
A widely used vocabulary for risk management is defined by ISO Guide 73, "Risk management. Vocabulary."
In ideal risk management, a prioritization process is followed whereby the risks with the greatest loss (or impact) and the greatest probability of occurring are handled first, and risks with lower probability of occurrence and lower loss are handled in descending order. In practice the process of assessing overall risk can be difficult, and balancing resources used to mitigate between risks with a high probability of occurrence but lower loss versus a risk with high loss but lower probability of occurrence can often be mishandled.
- Intangible risk management identifies a new type of a risk that has a 100% probability of occurring but is ignored by the organization due to a lack of identification ability. For example, when deficient knowledge is applied to a situation, a knowledge risk materializes. Relationship risk appears when ineffective collaboration occurs. Process-engagement risk may be an issue when ineffective operational procedures are applied. These risks directly reduce the productivity of knowledge workers, decrease cost effectiveness, profitability, service, quality, reputation, brand value, and earnings quality. Intangible risk management allows risk management to create immediate value from the identification and reduction of risks that reduce productivity.
Risk management also faces difficulties in allocating resources. This is the idea of opportunity cost. Resources spent on risk management could have been spent on more profitable activities. Again, ideal risk management minimizes spending (or manpower or other resources) and also minimizes the negative effects of risks.
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Famous quotes containing the word introduction:
“Such is oftenest the young man’s introduction to the forest, and the most original part of himself. He goes thither at first as a hunter and fisher, until at last, if he has the seeds of a better life in him, he distinguishes his proper objects, as a poet or naturalist it may be, and leaves the gun and fish-pole behind. The mass of men are still and always young in this respect.”
—Henry David Thoreau (1817–1862)
“Do you suppose I could buy back my introduction to you?”
—S.J. Perelman, U.S. screenwriter, Arthur Sheekman, Will Johnstone, and Norman Z. McLeod. Groucho Marx, Monkey Business, a wisecrack made to his fellow stowaway Chico Marx (1931)
“For the introduction of a new kind of music must be shunned as imperiling the whole state; since styles of music are never disturbed without affecting the most important political institutions.”
—Plato (c. 427–347 B.C.)