- Cyrill Hannah A. de Leon
Risk Management is known as the process and system of distinguishing risks, assessing risks and planning approaches to regulate risks. In this growing business industry, risk management plan and business core analyses are essential and integral parts of a business plan. Each company or organisation must be aware of the possible potential risks that may arise within the organisation for it to be prepared if ever an unavoidable problem occurs and discover ways to reduce the effects if ever such problem takes place.
There are different types of risks from one business to another. Risk Management plan follows a systematic process. It must describe the strategies of dealing the risks that is particular to the business. Risk Management is essential in scheming, observing and reducing unfortunate events that will impact the business.
Each organisation has its own risk management. Healthcare Risk Management provides its own standards in delivering quality healthcare, ensuring patient safety and avoiding unfortunate consequences thus, carrying effective, efficient, and high quality patient care to clients.
- The Purpose of Risk Management within an Enterprise.
Risk Management is very essential in determining the possible problems that may arise in each organisation and for it to be equipped with risk precautions in order to manage and tolerate adverse effects. Quality management has always been important when we speak of the service division. This is specifically true with healthcare. In a healthcare setting, there are numerous risks that are prevalent like risk among the staff, risk among the patients or even risk among the entire organisation. Thus, it is very important for each organisation to have risk managers who will assess, monitor and respond to each risk to minimize exposure of risks that may be a threat to the organisation. As a healthcare provider, our main concern is the safety of our patients. In order for us to deliver the best quality healthcare to our clients, healthcare professionals specifically health care managers must work reactively and proactively to minimize any damage that may occur in the future or prevent any malpractice. (The University of Scranton, 2014)
- The Benefits of Risk Management within an Enterprise
Development and implementing of Risk Management is relative in each organisation. It is a continuous process that transpires not only in the beginning but all throughout the entire process itself. The benefits of Risk Management includes:
(Grow Indiana Media Ventures (LLC), 2014)
- Awareness of Risks
With the help of risk management process, the organization may be able to assess and identify the potential risks that may occur within the enterprise. In this way, managers may be able to weigh the severity of the risk and provide measures to solve the problem. It is the responsibility of those in higher positions or the enterprise managers to allocate time to it’s staff to let them be aware of the hazardous risks and the corresponding approach.
- Reduction of Financial Risk
Every company’s aim is to gain profit. It is the prerogative of each company to develop risk management plan to evaluate the risk that may affect the market, operational services and other related circumstances. Risk management will also help to better manage the costs and the visibility of risks to the economic condition.
It will also aid in the management of financial stability of the company thus avoiding any chance financial instability or worst, bankruptcy.
- Improved Attention and Communication of Risk
This provides a standardised context of risks for all the members within an organization. It is very important that each organization should communicate among every department regarding the status of the company and communicate up from the senior management down to its labor workers regarding risk information within the operations of the company and discuss insights on how to properly manage risks to develop an effective approach to minimize risks.
- Avoid Future Problems
Risk management will enable the company to foresee the possible glitches that may occur in the company. With the aid of risk management, every company will be prepared on how to face these problems and minimizing or reducing financial costs. With this awareness, proper management will be implemented and it’s objective in controlling risks will be observed. Risk management enables to reduce or eliminate financial risk through a cost effective approach and proper intervention with the execution of a contingency plan that will aid in reducing risks that the company shall face.
- Risk Management Components in relation to the overall role of the Risk Management.
- Reviewing of Activities and Internal Environment
In this evolving world, the healthcare industry faces a number of issues regarding the reform of healthcare. Risk management in the field of healthcare is very important in achieving its goals and objectives and constructing plans in delivering quality healthcare to its clients. Risks in the internal environment of a healthcare institution is observed where standards should be observed in order to ensure the safety of the clients and to avoid jeopardizing their welfare. Risk Management in healthcare organizations focuses on patient safety and ensuring that clients receive the effective and efficient quality healthcare.
The following are the risks in the internal environment of a healthcare industry:
There are certain healthcare facilities that lack equipment or machines due to lack of resources or funds or due to unavailability because of certain damage or defect. The use of defective diagnostic machines may produce unreliable reults. This may jeopardize the treatment process of clients like for example, a patient with pneumonia may need to have an chest xray examination. If the xray machine would be unavailable or is damaged, the treatment process of the client may be delayed due to the inaccessibility of the diagnostics that will support the diagnosis of the disease.
- Staffing of Personnel
In as much as each healthcare provider would like to give the best quality healthcare to it’s clients, it’s is unavoidable that the workplace will be understaffed or overstaffing. But among the two, understaffing would likely affect the services that will be rendered to the clients. Whenever there is a lack of manpower, services are usually hampered and clients may most likely not receive suffer. The hiring of unskilled staff may also jeopardize the safety of clients. It’s the responsibility of the human resource department to properly screen newly hired personnel and provide them with basic training whenever someone will be hired in the company in order to ensure that they provide the best quality care that each client deserve. There are also incidents wherein services may be hampered due to absences of staff from work.
- Setting objectives
Setting objectives for Risk Management:
- The first step regarding risk management is Risk assessment. Risk assessment should be recorded, systematic and reviewed regularly. In this step, management committee will identify the potential risks that the company will be facing then manage the major risks that will arise.
- Identifying the risk whether it will just be a minor or major threat to the organisation. Determine what might happen when this potential risk will be observed in the organisation
- Analyse the level of the risk whether it will just be a minor or better yet a major issue and reviewing the controls into the system and the possible likelihood or the consequences that may occur when the risk will be observed.
- Evaluate the severity of the risk and then rank the risks. Communication within the organisation is very important because this will give awareness to the people and will enable them to discuss further what are the possible ways of minimizing the risk within the organisation
- Treat the risks by identifying the options, selecting the best responses, developing risk treatment plans and implementing them within the organisation. In this way, it will give them the assessment whether goals have been met.
- Event identification
There are internal or external events that may affect the risk management plan or strategies. In the healthcare setting, an example of an internal event that may affect the organisation is technical risk. If I will relate it to the healthcare, almost all hospitals use the patient information system in supporting the patient care process through computer based patient records, patient care systems and patient classification systems. This system provides the necessary details in order to properly manage clients according to their specific needs. If for instance there will come a time that the software may fail, this will surely affect the entire organisation. It may affect the function of the organisation in keeping track of the record of the patient. Thus, it is very important that each organisation should not only be reliable to software programs. They must also keep hard copies of each patient record to serve as standby file of their records. In this way, patient care may not be jeopardized.
In the external events, there are uncontrollable situations or events that occur outside the organisation causing a great impact like natural calamities such as floods, earthquakes, fire. These events may affect the organisation in such manner that there will be a great possibility that the staff may not be able to work and the company will suffer because it will lack manpower thus, production may be put risk and profit will be minimized.
- Risk assessment with particular reference to the impact and likelihood of risk
Each organisation follows its own policies and regulations. Orientation of the staff is very important to decrease the likelihood of risk. For example in a healthcare setting, the administration should orient its staff for them to be aware of the policies within the organisation or better yet provide them with seminars, programs and trainings from time to time that will help them increase their knowledge, let them be aware of the up to date changes in the management and let them be equipped with the desired skills in case potential threat may arise in the company.
- Risk response plans
Many organisations implement risk response plans that will help them avoid or control potential threats and apply the necessary risk management controls to a specific organisation. There are different ways on how to respond to specific risks. Few of the following are:
In case of occurrence of any risk, each organisation must be able to accept and recognize the problem. With this, the team will be able to develop proper management plans in order to regulate risks.
There are always risks in every organization. We know for a fact that it is unavoidable but with mitigation, this will reduce the probability and impact of risk in the organisation by taking some measures by the time the company faces the risk. For instance, companies may organize seminars that will help the team develop project management plans.
In this, risk is eliminated by developing strategies even before the company will face the risk. This will also help in preventing major damage to the organisation.
Risk Management strategies identifies external threats along with strategies that will aid in addressing each problem.
- Control activities
Risk Control is the method by which the organisation evaluates the potential losses and takes the necessary action to reduce or eliminate the threat. It involves the implementation of standards and policies and managing procedural changes. Controlling risk management is the solution in maximizing profits in the business. Developing control activities will help in decreasing the risk of business failure and for the accomplishment of goals and objectives. Control activities that will decrease the likelihood of risk includes supervision of the team by the senior management in taking precautions in case a threat may be predisposed in the company. Reporting will also help in keeping the team updated on the latest strategies that will be useful in controlling the risk in the organisation.
- Information and communication
Information and Communication should be observed within the organisation to help the team keep posted on what are the precautions that should be observed in case the company faces a threat. The top management plays a very influential role in the dissemination of information in the enterprise. It is the obligation of the top management to relay the necessary information down to the different departments of the organisation. Communication serves as a foundation in planning, organizing, motivating each team. It can be through verbal or written form such as memorandums, emails or forms. Communication and relaying of information is necessary in moulding the reputation of the organization. Correct dissemination of information within the organization will prompt customers to be loyal with the company and promote or boost the organization’s image and to its customers.
Monitoring is the process of implementing risk plans, tracking identified risks, monitoring residual risks, identifying new risks, and evaluating risk process effectiveness throughout the project. Regular monitoring enables the management to keep track of the risks and to foresee circumstances making the implementations effective and analysing the results of the plans. This includes the continual measurement and monitoring of risk environment and the performance of risk management strategies.
Risk management is important in an organisation because without it, a firm cannot possibly define its objectives for the future. If a company defines objectives without taking the risks into consideration, chances are that they will lose direction once any of these risks hit the organisation. Risk management is very essential in each organisation because it will help in preventing loss or even damage to the institution.
The risk management plan should propose applicable and effective security controls for managing the risks.
Grow Indiana Media Ventures (LLC). (2014). Benefits of Enterprise Risk Management. Retrieved from
The University of Scranton. (2014). The purpose of Risk Management in Healthcare. Retrieved from
Emergency Care Research Institute (ECRI). (2009). Healthcare Risk Control. Retrieved from
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