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C (i) Illustrate your understanding of the term ‘risk management’ - Leaving Cert Business - Question C - 2011
Question C
C (i) Illustrate your understanding of the term ‘risk management’. (ii) Describe three methods a manager might consider to minimise risk within a business.
Worked Solution & Example Answer:C (i) Illustrate your understanding of the term ‘risk management’ - Leaving Cert Business - Question C - 2011
Step 1
Illustrate your understanding of the term ‘risk management’
Answer
Risk Management is a planned approach to handling the risks that individuals or businesses may encounter. It involves two primary components:
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Identification of Risks: This includes recognizing all possible risks or losses a business could face. Examples are the risk of fire, employer negligence, personal injury losses, or legal liabilities.
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Calculating Costs: This involves assessing the financial implications of potential losses and determining the costs of measures necessary to protect against these risks.
Step 2
Describe three methods a manager might consider to minimise risk within a business
Answer
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Insurance: Transferring the risk to an insurance provider by paying a premium. This ensures that the company will be compensated for any losses incurred, thus minimizing the financial impact on the business.
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Safe Procedures: Implementing strict adherence to procedures and protocols, especially in managing cash or conducting business operations. This emphasizes the need for secure procedures and diligent monitoring to mitigate risks associated with operational failures.
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Regular Risk Assessment: Conducting periodic evaluations of risks faced by the business to identify new threats or changes in existing risks. This proactive measure helps in adjusting strategies to better manage risks over time.