Risk Management Strategies Essay Example | Topics and Well Written Essays - 1500 words

Risk Management Strategies - Essay Example As a result, more and more small companies are turning to a strategic approach as the way forward. Therefore, it is conclusive that risk planning has a very high significance in the risk management model, and, as secondary research shows, larger firms have more sustainability because they focus on risk planning and opportunity development. A firm's behavior in planning is also affected by the perception of its environment and size, as well as the nature of its activities, but not on the firm's performance. Although all small businesses have an amount of risk, being a new start-up restaurant and producing customer service goods adds further risk. This creates quite a bit more exposure to risks from mismanagement than in larger firms, where a major risk is that "some change will occur that will leave the enterprise beached high and dry," and "enterprises must expect to change drastically and repeatedly in response to changes in customers' wants and purchasing power, in competitors' products and prices, in available technologies, in law and in social expectations" (Goetz p 25 2001). The overall rationale to management is to answer the circumstances that develop risks. In business, the successful management strategy must be resilient in the face of failure, and develop sophisticated business plans because major chains have created competitor risk by raising the bar with strategic planning, which is a large part of their success according to Kep Sweeney (Garber p 88 2006). Sweeney further states that "The critical points in the deal making phase include identifying a new concept, forming a team, raising money and finding real estateYou can engineer out a tremendous amount of risk-and increase your chance of success-with proper planning." (Garber p 88 2006). Historic Role and Function Kerzner (p 876 1998) first identifies risk planning as "the process of developing and documenting an organized, comprehensive and interactive strategy and methods for identifying and analyzing risk issues, developing risk handling plans, and monitoring how risks have changed," to the small business owner, this means that a step by step analysis of proposed risks and their possible changes is an inherent part of risk management. Secondly, Kerzner (p 878 1998) describes risk assessment as "the process of identifying and analyzing program areas and critical technical process risks to increase the likelihood of meeting cost, performance and schedule objectives," this will assist the risk management model by answering to the critical processes that create risks and the businesses responses in those areas. The risk identification process is also shown by Kerzner (p 880 1998) as "process of examining the program areas and each critical technical process to identify and document the associat ed risk," in risk identification, the internal and external factors are described and levelled according to their significance to the program area. For example, while a flood may be a risk, that is minimal if the business currently has a leaking roof. Risk analysis "is the process of examining each identified risk issue to estimate the likelihood of