It starts from establishing the context, which is depends on the internal and external environment of organization. Then the risk assessment is comprised by risk identification, risk analysis and risk evaluation. After detecting the risk, organization is required to take action for different situation of risks to reduce its undesired results. Figure 7 Risk management process (Lark, Nikonov 2015) 2.5.3 Risk control
When ranking risks remember to consider how soon it could transpire, the losses and costs if it does happen, and if this occurrence would affect day to day operations. The greatest risks are the ones that cause the most damage to life, structures, business, finance, or the environment. A person may not be able to prevent every risk they may face; however, they can be ready for
This chapter presents a review of existing literature related to the research problem. It provides the understanding and insight necessary to develop a logical framework on compliance; to generate ideas for possible areas of research; identify a number of studies worthy of further evaluation; as well as providing opportunity to expand on the work of others. This chapter discusses the theoretical explanations on supply chain risk management and an empirical review carried out. For the purpose of the review, the chapter is divided into the following sub-headings: definitions of risk, supply chain risk management, supply chain risk issues, risk identification in supply chain, risk sources in supply chain, and mitigation strategies in supply
Firstly we have the SWOT Analysis in the SWOT analysis risk is categorized into weaknesses and treats, weaknesses are considered eternal risks such as low diversification which may lead a company to negative event, and threats are considered to be external risks such as high regulations or competitors, with the SWOT analysis managers have the ability to better assert situations which could eventually improve their decision making. Secondly we have the cause convergent also known as the bottom up technique where it is believed the best way to identify risk is first look at an event where a possible loss may accrue and then look at the perils of such even and see how both are likely to impact, thirdly we have the HAZOP approach which is mainly in the development stage of operations, the mindset behind the HAZOP approach is to take highly complex risk problems and make them manageable by asking questions like "What is the purpose of X" "How could X deviate from this purpose?" or " what could cause such deviations" these questions are asked to different parts of the company until the whole business is examined. Lot of other techniques exist as well like surveys where questions are asked to seek risk in a particular area, anther techniques that could be used is working
Government-related uncertainties: In general the acts passed by government may be very costly to a client. The impact from a change in regulation can also affect the contractor’s profitability with respect to the act passed and the profit expected from project. For example, the enforcement of noise control policy may require the use of pneumatic plant in the installation and operations of piles rather than the application of percussive plant. As a consequence any extra costs will be either borne by the contractor and often by the subcontractor or passed on to the client. Furthermore, changes in taxation and interest rates can affect a project’s financial viability or its planning and execution.(P.E.D.
The Risk Assessment Matrix expresses the risk rating as the severity of risk, and it is determined as the combination of the likelihood and consequence of risk occurring. In general, the Risk Assessment Matrix consists of two elements, the first element which is likelihood, measures the frequency or probability of a risk; while the second element which is consequence, measures the impact of a risk on a specific scale, such as cost, time, quality, damage to person or assets and many more. The scales for measuring risk consequence are called risk targets. Examples for risk targets are cost increase and project delay. A risk target is any measure that expresses the consequence of risks in relevant terms for the
Contract incompleteness is seen almost inevitable in contractual relationships due to multiple reasons such as future uncertainty, coverage of time period and choices of contract owners (Baker & Krawiec, 2006). Moreover, Goetz & Scott (1981) pointed out that long term contracts are more prone to be incompleteness because of uncertainty as to future conditions and expected level of complexity. Incompleteness regarding the contracts arises when duties, obligations or rights of the contracting parties are not specified clearly in every future state of the world, therefore one of them get an opportunity to renegotiate over the contract again. It is evident that contract incompleteness creates inefficiencies in trading markets around two main problems:
For instance, Amaldoss et al. (2000) argued that, cooperation between competitors can hinder or delay the process and slow investments in new technologies. Conflict between firms can hamper each company’s performance when they attempt to collaborate (Morris et al., 2007). Also, lack of experience in working together with new partners can make considerable demands on management time, attention, efforts and energy, which may lead to neglect of the organization’s core business activities (Zeineldin, 2004). A coopetition relationship may cause firms to experience a loss of control over activities or resources.
When a stable response strategy is agreed upon, the process enters final stage, where an assessment of the risk associated to the response strategy is conducted as explained next in risk management section. 3.2 RISK MANAGEMENT The risk is calculated as the product of its probability of occurrence and the resulting affect on the project. Each risk has three dimensions- quality-risk, cost-risk and schedule-risk. According to Gericke, risk treatment can be classified into preventive, reactive and proactive risk treatment[5]. Preventive risk treatment aims to prevent any risk by eliminating its causes.
3.1 Terminologies used in Risk Assessment The important terminologies involved in hazard identification and risk analysis are follows Harm: Physical injury or damage to the health of peoples either directly or indirectly as a result of damage to property or to the environment. Hazard: Hazard is a situation that poses a level of threat to life, health, property or environment. Most hazards are dormant with only a theoretical risk of harm however once a hazard becomes active it can create emergency situation. Hazardous situation: A circumstance in which a person is exposed to a hazard Hazardous event: A hazardous situation which results in harm Accident: An accident is a specific, unidentifiable, unexpected, unusual and unintended eternal action which occurs in a particular time and place with no apparent and deliberate cause but with marked effect. Risk: Risk concerns the deviation of one or more results of one or more future events from their expected