BENEFITS

Effective Enterprise Management as an integral part of the corporate charter can bring far reaching benefits to all organization whether small, large, public or private sector.

The benefits include

1. 2. 3. 4. 5. 6. 7. Better basis for strategy setting Focus on doing the right things properly More efficient use of resources Reduce waste and fraud Better value for money Improved innovation Better management of contingent and maintenance activities

IMPORTANCE
1. ERP is a route map bringing together principles, approaches , interrelated processes and specialism 2. ERP also advice how principles, approaches and processes should be embedded , reviewed and applied differently depending upon the nature of risk 3. ERP can be applied to both negative ( Threats ) and positive ( Opportunities) i-e how to reduce the size of possible threat or how to increase the size of possible opportunity 4. ERP can be properly structured and adopted as a standard operating procedure

TYPES OF RISK
THERE ARE THREE TYPES OF RISK IN THE EMERGENT CONCEPT OF ERP

1. OPPURTUNITY BASED RISK 2. UNCERTAINTY BASED RISK 3. HAZARD BASED RISK

THREE TYPES OF RISK AND THEIR MANAGEMENT

UNCERTAINITY BASED RISK OPPURTUNITY BASED RISK

. Business Continuity
Planning

MANAGED BY

HAZARD BASED RISK

MANAGED BY

. Assessing the

MANAGED BY

. Safety and Hazard

up/down side of Risk

management Tools Techniques and Methods

RISK MANAGEMENT PROCESS

ESTABLISH THE CONTEXT
IDENTIFY THE RISK ANALYSE THE RISK EVALUATE THE RISK TREAT THE RSIK

RISK MANAGEMENT PROCESS

STEP-1 ESTABLISHING THE CONTEXT

Risk Management Process is sequential series of steps or protocols that when undertaken in chronological order sequence , enable continual improvement in the decision making. STEPS ARE AS UNDER,
Before beginning risk identification it is important to define the limits, objectives and scope of the activity. For example in conducting the risk analysis for a new project such as the introduction of a new piece of equipment or a new product line it is important to clearly identify the parameters for this activity to ensure that all significant risks are identified. Establishing the parameters and boundaries of the activity or issue also involves the determination of Timeframe Resources required Roles and Responsibilities Expertise required Internal and External relationship Depth of analysis required

STEP- 2 DEVELOP RISK CRITERIA

Risk Criteria allow a business to clearly define unacceptable level of risk. Risk criteria may include the acceptable level of risk for a specific activity or event.

STEP- 3 IDENTIFY THE RISKS

Before the identification the criteria for acceptable and unacceptable level of risk is determined. Risk can not be managed unless it is first identified.Once the context of the business has been defined the next step is to utilize the information to identify as many risks as possible.The aim of the risk identification is to identify risks that may affect either negatively or positively the objectives of the business and the activity under analysis. Risk can be identified in two ways, 1. Retrospectively 2. Prospectively

RETROSPECTIVE IDENTIFICATION
Retrospective risks are those risks that have already been occurred such as incidents accidents. There are many ways for the sources information for this type of risk, Hazard or incidents logs , registers Audit Reports Customer Complaints Past staff or client surveys Newspapers or professional media and websites.

PROSPECTIVE RISK
These are the things that have not occurred yet happened so harder to identify. These may happen in future. The rationale is to record all the significant risks and monitor or review the effectiveness of their control . Methods for identifying prospective risks include, Brainstorming with staff and external stakeholders Researching the economic, political, legislative and operating environment Conducting interviews with relevant people and organizations Undertaken surveys of staff or clients to identify anticipated issues or problems Flow charting process Review system design or preparing system analysis techniques

STEP 4 ANALYSE THE RISKS

The risk analysis steps will assist in determining which risks have a greater consequences or impacts than others that help in providing a better understanding of the possible impact of the a risk or the likelihood of it occurring in order to make a decision,

ELEMENTS OF RISK ANALYSIS

1. 2. 3. 4. 5.
Identify the existing strategies and control to minimize negative
risk and enhance opportunities

Determining the consequences of negative impact or an opportunity.it is necessary to estimate the impact of a risk or

opportunity on the identified objectives. Determining the likelihood of a negative consequences or an opportunity ( likelihood = Probability x Exposure ) Estimate the level of risks by combining consequences ad likelihood Consider and identify any uncertainties in the estimates

RISK ANALYSIS TOOLS

1. 2. 3.
There are three categories of risk analysis Qualitative Semi-quantitative Quantitative The most common type of risk analysis is qualitative method. The choice of analysis chosen based on the area of risk being analyzed.

STEP- 5 EVALUATE THE RISK

Risk Analysis involves comparing the risk
found during the analysis process with previously established risk criteria and deciding whether these risk require treatment. The result of a risk analysis is a prioritized list of risks that require further action.

RISK ACCEPTANCE
1.
Low or tolerable risk may be accepted due to following reasons The cost of treatment may exceed the treatment. The level of risk is so low that specific treatment is not appropriate with available resources. The available opportunities may outweigh the risks. Treatment of the risk may not be available.

2. 3.
4.

STEP- 6 TREATMENT OF RISK

Risk treatment means options for treating
the risks that were not considered acceptable or tolerable, in order to either reduce or eliminate negative consequences or to reduce the likelihood of the adverse occurrence. Risk treatment also aims to enhance positive outcomes.

RISK TREATMENT OPTIONS

Following are the options available for the top management to treat the risks, 1. Avoid the risk 2. Change the likelihood of the occurrence 3. Change the Consequences 4. Share the risk

CONCLUSION
Risk management is the central part of any
organizations strategic management. It is the process whereby organizations carefully deal with the risk attaching to their actions with the aim of attaining sustained benefit within each actions and across the portfolio of all activities. ERP brings together the managing of all risks. It raises the chances of success and lessen both the probability of failure and uncertainty of achieving the organizations objectives.