Riskmanagement can be defined as the identification, analysis; assessment, control,avoidance, minimization, or elimination of unacceptable risks, whereasoperations management is the design, execution, and control of operations thatconvert resources into desired goods and services, and implement a company’sbusiness strategy (http://www.
businessdictionary.com). In this paper, the mainfocus will be on risk management and operations management and how they can beintegrated into today’s operating management environment, also the reasons whywe need risk management in today’s business situations and why is it becomingmore important. Riskmanagement pertaining to business is considered to be more of a practice.
It isseen as an important concern in any organization, in order for them to succeedout there in the modern business environment. Overall it consists of a numberof activities which should be both focused on and also integrated. It goes onto guide the attention and awareness of businesses and at the same time lookingat all the necessary possibilities from which certain risks and opportunitieswill be realized. In general, good risk management practice means simplycreating proper awareness and being prepared in the case that a risk arises. Inregards to project management of businesses, risk management is an importantaspect. Risk management includes ideas such as the planning of risk management,resourcing, and ownership as well as project lifecycle management whichinvolves risk controlling as well as risk reporting and monitoring.
Firstly,I would start off by saying, based on knowledge and previous researches done onthis topic that I strongly believe that risk management should be integratedinto an organization’s management system, but however, I do not think it shouldbe used as an individual or independent process. As we all know it is quite obvious that risksexist in nearly if not all aspects of our business world and therefore somerisks are easier to predict while others remain unpredictable and beyond ourcontrol. Risk management has been around for quite some time, so it is notconsidered as a new tool for businesses. Although risk management has beenpracticed for thousands of years, it was not until the 1950s that it wasarticulated and formally developed by academics working in the field ofinsurance (Campbell, K & Campbell 2009). In most organizations, riskmanagement is being used as an essential factor at all the levels of anorganization, but most importantly when it comes to good decision making andgood management.
The overall objective of risk management is to basically dealwith the identification of risks and finding suitable ways and solutions toreduce these risks. For the most important part of it, I believe that all managersand those in charge are expected to act in a proper manner and play their roleswhen it comes to the risk management process. Some of the most frequent riskthat businesses are faced with or undergo on a day to day basis exists in theareas of design, operations, testing, development, training, integration,requirements and the list can go on. Today,we live in a world that is rapidly changing because of technologicaladvancements and so for most organizations understanding the true meaning, fullpotential and ability to keep ensuring business continuity, in the long run, isa very important aspect when it comes to maintaining both aspects ofcompetitive edge and performance. For many businesses, I think that theplacement of security levels will be a great idea to better protect themselvesas well as their employees. Nowadays, a lot of the current risk that businessesface on a day to day basis is all obvious due to the nature of the environmentin which that particular business may operate. As it relates to the operatingenvironment it is important for these businesses no to focus totally on theenvironment itself, but to also consider some of the risks that may beassociated with the industry itself.
I believe that effective and efficientrisk management should be put in place to play a key role in the culture of anybusiness if they want to be successful and keep up with the good name andreputation. In any organization, the practice of risk management is best suitedfor establishing the main priorities of that organization and helping todetermine which risk is potentially most likely to occur and which will be mostdestructive.Froma business point of view operations management is solely responsible formanaging and coordinating the resources that are needed to help produce acompany’s products and services.
If there is no use of operations managementthere would most likely be no products to sell. The roles of operationsmanagement are very important and are used to transform the organization’sinputs such as technology, materials, facilities, human resources etc. into acompany’s finished end products.
The business functions need information fromoperations management in order to perform their tasks properly in general.Operations Managers are quite highly dependent on input from other areas.Companies today are very much aware that successfully managing their OMfunctions is really not enough in terms of maintaining leadership in a highlycompetitive market. Operations risk arises not only from a company’s operationsbut also from any disturbance in its operational process (Hong 2013).Whenit comes to the supply chain, for example, we can say that every companydepends on other materials along that chain to successfully deliver the rightproduct to the final customer in yet a timely and cost-effective way.
For anyreason or so that the OM function of other members of the supply chain is notmanaged properly, the excess cost will be added which later on will be passed down to all the other members of thesupply chain in the form of higher prices, so that simply tells us that all themembers of the supply chain should take all of the necessary means andprecautions to manage their OM function if they want to be successful, hencethe reason why all of the companies that are made up of supply chains need to take the time off andmake sure that the OM functions are linked closely and working together as oneunit, so that the entire supply chain would work along smoothly in an effectiveand efficient manner without experiencing any problems. Many risks events in supply chain cause delays and disruptionsin matching supply with demand (Kouvelis et al 2011).Operationsmanagement is known to be a very important part of any organization. If thereis not an efficient operations management system put in place for any businessthere would be a great chance of risk arising.
Some of the main aspects ofoperations management I believe are somewhat centered around proper qualityservice and good accuracy and controlling risks. The operations managers of anyorganization are expected to work along hand in hand and side by side withcorporate risk managers, therefore, it is right to say that they are the oneswho are responsible for ensuring that workers are aware of an organization’snatural risks and the actions concerning these risks. Operations management isone of the processes which occur internally. However, operations managers workalong with various departments towards achieving goals such as making sure thecompany’s products are manufactured according to specifications, packagedproperly, sold to the right retailers and marketed successfully. Operationmanagers share many duties; it doesn’t matter where they work. Operationsmanagement can be strategic, tactical and operational. Organizations and industries faceoperational risk wherever they turn. The area of risk management focuses onaspects of the natural, political, economic, engineering and also socialsciences.
In today’s modern society the OM environment is very much complex anddifferent from what it used to be a few years ago. Today customers are demanding a betterquality, greater speed, and lower costs. In order to succeed, companies have tobe masters of the basics of operations management. In the business world, there are a number ofways that businesses, in particular, cantake into consideration when looking at the pros and cons of implementing theirinnovative and new ways of going about conducting or managing their business.Businesses look at risk management as a specific way for organizations toevaluate whether or not it will be profitable for them to make various changesthroughout the business practices and also their operations.
The typical ideaof risk management is a good way for people and organizations to manage thethreats that they are faced with or presented to them on a regular basis. Thetask of a risk manager is to predict and enact measures to control or preventlosses within a company (Risk Management 2009). Risk management helps to lowerthe chance of taking high-risk actions that have low-value results. With theimplementation of appropriate risk management techniques in businesses, peopleare given the opportunity to properly evaluate the threats, risks, and value ofspecific decisions to help grow and build a secure business. Once proper riskmanagement is being applied it will help in the reduction of an eventoccurring, and most of all the extent of its impact. The main reason why mostbusinesses engage in using risk management is so that it can be used as a meansof identifying possible risks, planning, reduce or allocate risks and provide arational basis for better decision making in regards to all risks. Riskmanagement is categorized as a part of information security.
In many instances,risk management is being carried out by risk control along with riskidentification. The entire process is said to be very manageable and simplewhich simply means there should not be many problems when it comes to the artof implementation but instead project managers are the ones who are afraid ofusing risk management simply because of the fact that they have the idea ofbelieving that if the risk is realized, it will somewhat be seen as their faultfor the risk-taking place. In many businesses today risk management isbeen used for a number of reasons such as; it may be used as a legalrequirement depending upon the industry or sector one is being involved in alsoit helps to promote good management and lastly, since resources available arelimited therefore a focused response to risk management is necessary orneeded. Another main aspect of thispaper is why risk management may fail in the operations of businesses.
Riskmanagement may tend to fail in businesses for many reasons. For instance, itmay fail because of a failure to share information also a lack of topmanagement support, limitations of scope and for the fact that all stakeholderswere not being engaged. Today risk management is becoming more and moreimportant when it comes to the operations of businesses simply because of thefact that management teams are now being more cautious after learning from pastmistakes that they have made, also they are aware that insurance isn’t ascomprehensive as they think and legislation are becoming way more strict thanthey were before in the past.
Inconclusion, I can conclude by saying risk management is a practice which whenfocused upon and integrated can be most effective. In today’s business world faces a widevariety of risks and threats that can somewhat have disturbing effects.Overall, all organizations manage their risk to some type of degree and theirmain and final goal is to integrate the process for managing risk into theorganization’s overall management, policies, reports, values, cultures,planning and not forgetting strategies.