Risk management is the process of identifying, measuring, and treating exposure to loss of property, liabilities, income and personnel. The ultimate goal of risk management is the preservation of the organization's physical and human assets for the successful continuation of its operations. The job function of risk managers involves identifying and evaluating various types of risks that could affect the predominant business. They design strategies to minimize risk and identify what could go wrong and its impact on the current business.
As a result, many strongly believe that security managers should report directly to the risk manager. If the medical device company is too small to support a chief security officer, the risk manager must assume those responsibilities. The management of claims can also be part of the responsibilities of the risk manager, although the actual management of the claims can be delegated to human resources, an external administrator, an insurance company, etc. Loss costs cannot be properly managed if risk management, security and claims management are separated.
They are integral parts of controlling the final cost of risk for an organization. As for the scope of the risk management function, this could include common exposures to property losses, 26% statutory liability exposures (including most recent exposures, such as exposures to liability for employment-related practices), liability for defective products, exposures to car fleets, and regulatory compliance (FDA, OSHA, EPA, etc. As for the participation of risk management in purchases, many would want the security director to participate in the decision-making process to purchase equipment, tools and any changes (or extensions to buildings or facilities) that have an impact on safety. The risk manager must be involved in all initial discussions about any major changes in facilities, products, or processes.
Risk management is a staff function. As such, the risk manager will develop plans to control and reduce risk, but the implementation of all risk control, security, and loss prevention actions remains the responsibility of line management. Too often, line management is seen as trying to transfer final responsibility to the risk manager or security director. This must not be allowed to happen.
The main task of the risk manager is to collect data and conduct research to recognize the risks that an organization might be exposed to. The organization in the field of IT and engineering requires risk managers to have the technical knowledge and specialized qualification in the field. Consequently, it is important to understand the basic principles of risk management and how they can be used to help mitigate the effects of risks on business entities. However, before determining the best way to manage risks, the company must locate the cause of the risks by asking the following question: “What caused that risk and how could it influence the company? Risk managers are also involved in implementing control systems and action plans to safeguard the organization's assets and resources.
By making employees aware of risk management policies and procedures and making them think about issues of safety, liability, etc. In addition, progressive risk management ensures that high-priority risks are treated as aggressively as possible. Some believe that the risk manager should report directly to the chief financial officer, since the purpose of risk management is to protect the organization's financial assets from possible risks and losses. Risk management is an important process because it provides the company with the necessary tools so that it can properly identify and address potential risks.
Therefore, effective risk management offers the potential to reduce both the likelihood of a risk occurring and its potential impact. .
