Importance Of Risk Management

1.0 INTRODUCTION

Risk management is the identification, assessment, and prioritization of risks. Risk management also use to magnify the opportunity and easy for us to realize it. Risks have various types, but when we talk about the industry or business scope, risks can come from different ways uncertainty in financial markets, threats from project failures, legal liabilities, credit risk, accidents, natural causes and disasters. There are two types of event majority such as negative event can be classified as risks while positive events are classified as opportunities. Threats also known as uncertainties and risk management discuss about the strategies to overcome the threat likeavoiding or transferring the threat to another party, reducing

For example,it helps in writing a mission statement for risk management for the organization. and communicating with every section of the business to promote safe behavior. It helps to identify risk management policy and processes and also pinpointing all risk exposure. Besides,risk management helps to allocate costs and also negotiate insurance terms. This type of management keeps accurate records and writes risk management manuals set up the process of identification, monitoring, assessment, evaluation, and adjustments.

4.0 IMPORTANCE OF RISK

This is a wide theory and it has different layers of application and also uses. Regards to the benefits, risk management has many ways to implement and use in a company according to the company structure and problems. In this paper work, we focusing on the risk management on the purchasing and supply chain and we found out that the benefits and importance of risk management in this area. If a company operates without the risk management, then the company will access to the risk anytime without any expectation or prediction, then it will cause many of spontaneous problems to the company. In this incident, the company will not well prepare to face the sudden risks and will expose to the troubles, this will directly affect the company performances. For the purchasing and supply chain part, company will direct purchase any goods before doing the risk screening and this might cause problems after purchasing. In the supply chain process, if the company does not do the well risk management on it, this will cause many of unnecessary circumstances along the whole supply chain. Definitely, risk management also play important roles in other scopes in a company. Risk management not only applicable on the industry like manufacturing, servicing but also useful in self-management, or any institution when coming to the decision making session. This is a very interesting knowledge and we hope we can