Risk management Essay Example | Topics and Well Written Essays - 3500 words

Risk management - Essay Example The systemic risk governance requires unity between the countries and enclosure within the process of industry, government, academia and the civil society. Governance is defined as the processes, traditions, actions and institutions by which the authority exercises and takes decision which is then implemented (Aven & Vinnem, 2007). Risk Governance The term risk governance can be defined as the assessment, identification, management and communication of the risks in a board framework. It comprise of â€Å"actors, rules, conventions, processes and mechanisms and is concerned with how relevant risk information is collected, analyzed and communicated, and how management decisions are taken†. It uses the main beliefs of the good governance that includes effectiveness, transparency, efficiency, strategic focus, accountability, equity, sustainability and fairness. It deals with the rule of law and also need to chose the solution which will be legally and politically feasible along wi th publicly and ethically acceptable. Risk is always accompanied by changes. It is an important and permanent part of every life. The urge and the capacity to accept the challenge of the risk is very crucial for the achievement of the economic development and the introduction of the new technologies. Sometimes risk is accompanied by potential opportunities and benefits in the emerging technological sector (Graham & Rogers, 2002). Good risk governance aims at minimizing the following: 1) The unfair distribution of benefits and risk between the countries, social groups and the organisations. 2) By modifying the approaches for assessment and management of the same risk. 3) By emphasising extensive focus on the high profile risks it can be eliminated but the lower profile risk are also looked upon. 4) By managing the risk tradeoffs. 5) Failure in understanding the secondary effects and the linkages between the issues 6) The cost is reduced in case of inefficient regulations. 7) The deci sions that are taken for inappropriate account of the public perception. 8) Decisions are taken for not losing the trust of the public. Risk oversight function The main challenge of managing the risk lies in the benefit that the society will receive from change and by minimising the ill consequences of the risk which is associated with the change. (Confusing sentence, reframe) The main aim of the Board of Risk Governance of every company is to oversight the risk that the company is going to face or faced already confronted with. The main risk oversight functions are the following: 1) The boards are worried regarding the strategic long term risk: Over sighting risk is an important duty of the boards. The boards pay serious attention to many facets of the issues that includes a wide range of risks that the companies confront and the various enterprise risk management (ERM) systems. But the members underline the fact that it is crucial for the boards to concentrate on the risks which a ffects the strategy of the company, leveraging talent of the directors. It is also needed to help the senior management for identifying, analyzing and responding to those risks. The challenges that are posed to the very existence of a company are the big risk of the disruptive technologies and the new business models. The new business models which emerge suddenly pose threat to the existence of the