The risk management activities in a company or an organization follow a certain process. This process is determined by the risk management framework. Along with this, the framework also decides the context and the tools required for the process.
Risk management is a necessary process for the modern-day business and a lot of things depend on how these risks are managed and how much the organization is spending for the process. The risk management framework decides all these factors and ensures proper risk management activities.
The risk management framework is mainly concerned with the three basic risks. These are the business risk, project risk and the operational risk.
Obligations of Risk Management Framework
The risk management framework decides a number of factors. The role of risk management in a particular company is primarily decided by the framework. The aims and objectives of the risk management activity are decided by this framework. A number of other factors are also related to the process of risk management.
These are the tools through which the actual activity of risk management is carried out, the necessary documents and so on. These are also settled by the risk management framework. In other words, the entire process of risk management is controlled by this framework.
Process of Risk Management
The risk management framework determines the exact process for the activity. The process of risk management starts initially with the identification of the potential risk factor. After identification of the threats, their impacts on the business are decided through certain data. Then the experts’ advice is taken and appropriate options are selected. These options are selected only after considering all the obligations, the expected cost of the process and so on. At the same time, the areas that need intervention are also decided by the management of the company. Once the risk management options are applied, regular evaluation of the process is a must. The risk management framework considers the stakeholders as an important part of the whole process.
Important Factors of Risk Management Framework
Before deciding any risk management framework the company management should consider what kind of standards of risk management could be set through the framework. On the other hand, the process and legal factors are also important in this context. Establishing a proper context and using appropriate tools and techniques are also important.
Last Updated on : 8th July 2013