Question

Explain for each of the following risks:

• Financial
• Operational
• Strategic
• Hazard

i) why the risk is a frequency and/ or severity concern to a College?

ii) Best risk treatment technique(s) to address the risk

Answer 1

- Financial risk- It is the risk that the organizations might not be able to repay the debts. This also means that the investors might lose money as well. Hence, the more the debts, the more is the financial risk.

- Operational risk- It is the risk of loss associated with inefficient and inadequate systems, process and/or policies. The causes of operational risk might also arise because of employee errors, systems failures, fraudulent activities or any other event that might disrupt the operations of the business.

- Strategic risk- refers to the risk of failure of business decisions. In other words, it is the risk that is associated with the business strategies or its objectives.

- Hazard risk – is the potential risk that might cause harm to people or assets. For example, working without safety equipment is life threatening.

(i) the risk frequency or severity is a great concern to the college because it might hinder the college’s ability to meet their business and strategic objectives. Frequency and the severity of the risks that have occurred should be analyzed to avoid/mitigate them in the future. Colleges are mostly concerned with the risks because most of the risks that the colleges face are operational risk, academic risks, financial risks, strategic and operational risks.

(ii) Risk treatments to avoid the risk are-

                - Avoiding – refers to eliminating the risks completely, withdrawing from or not being involved in the risk.

                - Optimizing- refers to reduction of risks through preventive steps.

                - Transferring- refers to sharing the risks such as outsourcing

                - Retention- refers to accepting the risk.

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