Identifying and Managing Risk Essay Example | Topics and Well Written Essays - 750 words

Identifying and Managing Risk - Essay Example This is because once risks are identified the right strategies and techniques are put in place to ensure that they do not have negative effects on the portfolio or project. By implication, it can be said that it is not right to try to deny the reality of the existence of risk. Rather, the existence of risks must be appreciated, identified and embraced. More importantly, the right techniques must be in place to managing risk. Kallman and Abdali, Mouath and Qusai have both come up with a number of risk management techniques which share some similarities and differences in terms of their implementation and usage. Reading through Kallman one finds three major risk management techniques that are highlighted by the writer. These are risk avoidance, risk tolerance, and risk acceptance. Writing on situations under which either of these may be deemed as appropriate for an organization, Kallman emphasized that â€Å"If a cost-benefit analysis shows the downside is just too large for the organizations risk tolerance then avoidance is a wise choice.† The author continued to advise that â€Å"If the situation falls within the organizations' risk appetite or tolerance, however, then acceptance is the appropriate choice.† From these two quotations, the technique of risk management is clearly outlined. It can be noted that Kallman advocates the use of systematic analysis of risk by weighing the impact of risk on the organization’s activities and programs. Once such weighing is done, it will be possible to determine the exact impact of the risk to the organization. By so doing, risks t hat can be contained without any significant negative impact can be allowed to remain so that the efforts to management can be sent on those risks that pose some levels of threat through risk tolerance.