THE RISK MANAGEMENT PROCESS
Basic Structure for Decision-Making:
IDENTIFY the exposures (risks) - sources:
- company operations (dynamic)
- leases, contracts, and other agreements
- legal environment (dynamic)
- insurance policies (what is not covered)
ANALYZE the exposures
- how likely to occur?
- how severe an impact?
- to the company?
- to the individuals?
SELECT the technique (or combination of techniques)
that will most effectively handle each exposure - alternatives:
- avoid the risk
- control the risk
- transfer the risk to another contracting party
- transfer the risk to an insurance company
- retain the risk
IMPLEMENT the selected technique(s)
MONITOR the treatment for effectiveness, and the exposures for change; implement revisions where appropriate
IDENTIFY and ANALYZE the exposures . . . (ongoing process)