RISK MANAGEMENT, General principles of risk management, Risk...


As a result of studying this chapter, the student must:

know general principles, strategies and tactics of risk management;

be able to organize the fight against risks and the economic consequences of risks;

own methods of risk evasion, localization and dissipation of risk, compensation and risk distribution.

General principles of risk management

Risk management can be described as a set of methods, techniques and activities that allow to predict the occurrence of risk events and to a certain extent, to eliminate or reduce the negative consequences of an offensive such events.

Risk management is a specific sphere of economic activity, requiring deep knowledge in the field of economic activity, methods for optimizing economic decisions, insurance business, psychology, etc. The main task of an entrepreneur in the field of risk management is to find an action option that provides the optimal combination for this project risk and income, taking into account the fact that the more profitable the project, the higher the risk in its implementation.

Risk management is a type of activity of professional institutions, insurance companies, as well as risk managers and insurance specialists.

Their tasks includes detection of zones (areas) of increased risk; risk assessment, an analysis of the acceptability of this level of risk for the organization; developing measures to prevent or reduce risk ; if a risky event has already occurred - taking measures to the maximum possible compensation for the damage caused. The risk management system is shown in Fig. 3.1.

Among the main risk management principles are the following:

1) you can not risk more than your own capital can;

2) you need to think about the consequences of risk;

3) you can not risk many for the sake of small.

The first principle requires that an entrepreneur determine the maximum possible volume of loss in the event of a risk event, and assesses whether losses will lead to bankruptcy of the enterprise.

Risk Management System

Fig. 3.1. Risk Management System

The second principle assumes that the entrepreneur, knowing the maximum possible amount of loss, decides to take the risk on his responsibility, transfer of risk to the responsibility of another person (risk insurance case) or to refuse risk (ie from the event).

The third principle requires the commensurability of the expected result (profit) with possible losses in case of occurrence of a risky event.

Risk management methods

Targeted actions to limit the risk in the business system are called risk management.

The application of risk management in modern economic activities includes three main positions:

1) identification of the consequences of the activities of economic entities in a risk situation;

2) ability to respond to possible negative consequences of this activity;

3) development and implementation of measures by which the likely negative effects of actions taken can be neutralized or compensated.

The content of risk management includes the preparatory phase of risk management, which involves comparing the characteristics and risk probabilities obtained as a result of analysis and risk assessment; the choice of specific measures contributing to the elimination or minimization of possible negative consequences of risk.

One of the ways to respond in a timely manner to the negative consequences of activities in a risk situation is a specially designed situational plan that contains prescriptions about the implementation of the risks of decisions in a given situation and what consequences can be expected . Thus, situational plans are a means of reducing uncertainty and have a positive impact on the activities of entities in market conditions.

The risk management system consists of the following basic elements:

• Identifying discrepancies in risk alternatives;

• development of plans that allow for optimal action in situations of risk;

• development of specific recommendations aimed at eliminating or minimizing possible negative consequences;

• preparation for the adoption of subordinate and normative acts related to risky activities;

• Accounting and analysis of psychological perception of risky decisions and programs.

Risk management in an enterprise can not be a set of moment actions. In any case, it is a a process of directed actions. Furthermore, the risk-management must be part of the overall business management process to achieve the result.

How does the process of risk management include a certain set of stages? It should be noted that in practice these steps are not necessarily implemented in strict sequence, but can be carried out in parallel. The general scheme of risk management is shown in Fig. 3.2.

There is a general sequence of actions reflecting the logic of the risk management process (in the figure - fat arrows). In addition, there are feedback links between the stages, i.e. on any of them you can return to the previous one. At the last stage, as we shall see later, an overall assessment and analysis of the process is carried out. The results of this phase will be taken into account in the further implementation of each stage of the risk management process. This is shown by the arrows on the right.

Stages of the Risk Management Process

Fig. 3.2. Stages of the risk management process

At the third stage, decisions are taken about the risk management methods used, which may require clarification of the risk information (first stage) or determine the monitoring scheme (stage 5). This is the logic of the sequence of implementation stages of risk management in the enterprise.

Now let's look at each of these steps in more detail.

thematic pictures

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