A Short Discussion about A Risk Management Example

Is your organization prepared to face risks? Every organization has potential risks to face,
regardless of what type of organization it is. You can start with the basic societal unit –
the family – and work your way up to corporations and government institutions; all these
have to face risks at some point in time.

Examples of risk

Risk comes in many forms and types but their commonality is that they have the ability to
threaten, harm, or injure the members and the assets of the organization in varying degrees.
Some types of risk are:

   1. Bad public relations or negative publicity.
   2. Customer complaints about customer service.
   3. Costly litigation.
   4. Fraud committed by customers, members of the organization, or other parties.
   5. Security leaks or weak points in the security system.
   6. System failure or equipment breakdown.
   7. Physical harm to organizational members and organizational assets.

Risk Management Example

A good example of risk management is the use of life insurance policies to cover the lives
of important people in the organization. This is called Keyman Insurance, in insurance
parlance, and helps to protect the organization from financial and productivity losses
should these very important leaders be injured or even die. Life insurance is often
associated with risk management, which is why even family breadwinners take out life
insurance policies for themselves – to protect family members from the very real risk of
poverty should the family breadwinner become physically incapacitated to work or perhaps
die.

It is not true that risk management is a very expensive option for any organization to
adopt. For example, life insurance premiums have become more affordable for family
breadwinners to pay for due to heightened competition within the industry. Just paying a
small sum out of your monthly income is a small price to pay for the security of your
family.