Associate in Risk Management: The Basics
It may sound like a complicated business term, but risk management is simply the act of recognizing risks and taking steps to minimize them. For example, if you are in the construction industry, your risk management strategies should involve minimizing the risks of failure on structures being built. If you are an investment company, you need to make sure that there are safety nets that you can utilize to minimize financial loss.
In the same vein, associate in risk management involves similar principles. If your goal is to minimize the financial, corporate or employee risks in your organization, here are some of the basic risk management techniques that you need to keep in mind:
-Employ risk avoidance tactics.
Risk avoidance involves skipping a step or process that involves risks. For example, if you are a doctor and there is a high risk of death or complication to a patient if you perform a medical procedure – your risk avoidance tactic would be not performing the procedure at all. You will just think of other alternatives which do not pose a high risk on the patient’s life or safety.
-Practice risk reduction.
Risk reduction is where you will take steps to reduce the impact of the loss. A homeowner for example, would install fire alarms to reduce the risk of property loss in case of fire.
-Employ risk retention schemes.
This principle involves accepting loss when it happens.
-Use risk transfer.
Risk transfer is most commonly practiced by purchasing insurance. Your car insurance company, for example, will cover your financial loss in case of vehicular accidents or theft.
In any business industry, risk is something which cannot be avoided altogether, but by applying these associate risk management principles – they can be controlled and managed efficiently.
What Does an Audit Risk Management Analyst Do?
If you are currently looking for a job, you may notice the ads for audit risk management analysts. Have you ever wondered what the job entails? What tasks are performed and how does one go about actually minimizing risks in business? To have a deeper understanding of the scope of an audit risk management analyst’s job, you need to first know what risk management is. Basically, risk management is the employment of steps necessary to prevent loss in any type of business. There are several principles involved in risk management. First, there is risk avoidance, which is not performing a task at all in order to eliminate the risk. Second, there is risk reduction which is more of a preventive measure so that the negative effects of the risk may be avoided. Risk retention is accepting loss as is, and finally, there is risk transfer which is usually practiced by purchasing insurance policies.
Now, as an audit risk management analyst, you would have to familiarize yourself with these risk management concepts to prevent or minimize any financial loss for the company that you are working for. For example, if you are the audit risk management auditor of a company with 100 employees, how will you go about retaining the valued employees that you have so that you can avoid the risk of them wanting to transfer to more lucrative jobs? If you are working for a sales company, what policies do you need to ensure to reduce the risk of your quota not being met? All in all, what you need to do is identify the risks, analyze its negative impact to the company, and employ the concepts of risk management to ensure that you will suffer as little loss as possible.