Risk is a part of our lives, every activity or task we perform has some risk involved. Therefore, each and every organisation have various risk involved in their business operation. This report identify and determine the various types of risk and the risk management functions of Equitable Funding Ltd. The study will describe the ways in which the company assess and manage the risk using different approaches of risk management. The report will also include the strategies, drivers and impact of risks on a business and its functions. Furthermore, the approaches of crisis management and business continuity will be described in the report.
There are many types of risk involved within a business and its functions, these risks have a great impact on the organisation's performance and profitability. The Equitable funding gets affected with different risks which are as described below -
Risk is a common element involved in each and every business in almost every sector. These risks are identified and analysed to reduce the rate of loss. The risk in different sectors are as mentioned below -
A business risk refers to the possibility an organisation may have lower than analysed profits and experience a loss rather than generating profit. These risks are affected by various elements such as per-unit price, sales volume, competition, sale volume etc.
Nature of business risks
The nature of various risks can be described with relation to its various features which are as described below -
The Risk management within an organisation such as the Equitable Funding Ltd performs various functions in order avoid the risks involved in the business operations. The Risk management performs various functions as described below -
The Equitable funding Ltd performs various functions which plays an important role in the management of risk. The various functions performed by the business for managing the risk as follows -
Continuity involves incident prevention, surviving disruption and recovery planning and company is to survive a period of disruption and recover from it. There are different types of barriers which are not beneficial for the business. However, they can use some vulnerability of the organisation, so they can able to run their business in regular basis(Glendon,Clarke and McKenna,2016). There are number of vulnerability for the company which can be used by the organisation. The various functions performed by the business for managing the continuity as follows -
In respect to solve the crisis management following approaches
Risk analysis is a process that help company to identify and manage potential problems that could undermine key business initiatives or project. Company can use some effective activities to identify the risk in the business. Organisation should know the physical risk of the company, so they can know about the employees issues and manger decision in the organisation. Further, they should have knowledge about location risk, so they can able to reduce the risk(McNeil,Frey and Embrechts,2015).
When they identify the all risk in the business then they should prepare a risk management plan, so they can able to reduce the all risk in the business. Moreover, they should know the all issues and problems of the employees, so they will be able to resolve their problems in the company. They are providing the credit services to their customers, so they should get then information about the customers who are not paying their outstanding amount on time. However, they will be ale to get outstanding amount from the unpaid customers. Through this process they can identify the all risk which are facing by the company. Company should use these activities for the business to identify the probability of risks.
An organisational risk such as the operational risk, financial risk etc are needed to be evaluated in order to make an effective plan for avoiding those risks. The evaluation of risk is essential to analyse and identify the rate of loss or harm it can do to the business or company. There are two tools use for the evaluation of risks which are as mentioned below -
Impact of the identified risks to the business of Equitable Funding Ltd
Once the company identified the risks they need to assess possible impacts of them. They need to distinguish the minor risks from major ones because minor risks are acceptable whereas major risks have to be managed fast(Pritchard and PMP,2014)
Analyse what is the level of risk
The company equitable funding Ltd. Should first analyse all types of the risks. For this first they have to workout on the probability of happening the risks. This is known as level of the risk and can be calculated by applying the formula:
Level of the risk= consequence x probability
Level of the risks can be determined by very low, acceptable, high and very high. It can be analysed by what the company is doing to control the risks because these things can measure the decrement of the level of the risk, however not completely eliminate them.
Risk analysis can be illustrated as the matrix below:
Level of the risk
Can occur more than one time in a year in the company
Can occur about one time in a year in the company
Can occur once in every 6 to 9 years or more in the company
Can happen only once in the company
Example of consequences:
Financial losses are of $50000 or more
Financial losses are between $11000 and $50000
Financial losses are between $1000 and $10000
Losses which are less than $1000
Once the company has been found the risk levels, Equitable funding Ltd. Should create a table of rating to evaluate the risk. Evaluation of a risk means decision making about its level and find ways to solve it. The company can find the risk rate by the formula mentioned above. Further they can solve the problem by the risk rating table below:
Rating of risk
Have to act immediately
Have to act in 1 month
Have to act in 3 months
Does not require any immediate action
Once the company has identified the risk, it has to rank the risks in proper order and do the solution accordingly.
Identifying the key risks to the strategic development or operation of a school, the next step is to decide which of the following approaches could best be adopted to resolve or control them:
This report concluded that the risks are involved in every business or organisation which affect the profitability and productivity of the company. The organisation must have an effective risk management system to reduce the impact of the risks and avoid them to maintain the continuity of the business. Furthermore, the report includes the evaluation and risk management plan for the Equitable funding LTD.
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