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C (i) Illustrate your understanding of the term ‘risk management’ - Leaving Cert Business - Question C (i) & (ii) - 2011
Question C (i) & (ii)
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 (i) & (ii) - 2011
Step 1
Illustrate your understanding of the term ‘risk management’
Answer
Risk management is a planned approach to handling the potential risks that individuals or businesses may encounter. It involves two key components:
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Identification of all possible risks/losses: This includes recognizing various risks such as fire hazards, employer negligence, personal injury, and legal liabilities. By thoroughly assessing these risks, businesses can better prepare for potential adverse events.
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Calculating costs of protection from loss: This involves estimating the financial implications of these identified risks and determining the necessary measures to take in order to minimize them. Effectively managing risk entails not only recognizing potential dangers but also allocating resources to mitigate them.
Step 2
Describe three methods a manager might consider to minimise risk within a business.
Answer
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Insurance: Transferring risk to an insurance company by paying a premium. This ensures that in the case of a loss, such as property damage or liability claims, the financial burden is shifted to the insurer, thereby protecting the business's assets.
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Safe Procedures: Implementing strict operational procedures which ensure that tasks are conducted safely and in compliance with regulations. This includes regular training for employees, adherence to safety standards, and secure methods for managing cash and resources, thereby minimizing operational risks.
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Health and Safety: Establishing comprehensive health and safety protocols. This encompasses identifying hazards, training employees on safety practices, and regularly inspecting and maintaining equipment. By fostering a safe work environment, the likelihood of accidents and associated costs can be significantly reduced.
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Install Security Systems: Incorporating alarms, fire doors, and CCTV systems to deter potential threats and respond quickly to incidents. This proactive measure enhances physical security, reducing the risk of theft, vandalism, and other security-related risks.