Risk Management

Published: 2021-06-29 06:56:33
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Category: Business

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What is risk?
Risk is the potential that a chosen action or activity (including the choice of inaction) will lead to a loss (an undesirable outcome). The notion implies that a choice having an influence on the outcome exists (or existed). Potential losses themselves may also be called "risks". Almost any human endeavor carries some risk, but some are much more risky than others.
As a general and very simplistic definition:
Risk is the potential that an event will have an outcome different from the outcome that is expected to occur.
Risk and action
We all view risk differently, and there are risks around us, so we need to understand the various dimensions of risk. What can we do before to deal with the risks?
There are some key steps to deal with risks more effectively.
Understanding the risks we face.
We must have a clear idea what those risks are if we want to managing risks effectively. In the case we read, we can know there are some risks that Papa Rondo is facing.
There are so many competitors, how can he make sure he can beat them to become the winner in this industry?
The money problem, Papa needs to borrow finance to purchase and install grape crushing equipment together with new wine fermentation and storage tanks. And he doesn't know whether this equipment could add value to Papa's business.
Grape is easy to perish; he must make sure grape can be harvested at the 'perfect moment' to ensure quality wine production. Because it is important to Papa's reputation within the industry as a reliable supplier.
A series of contractor delays and unexpected technical problems brought the project to a halt, it made the situation was made by general confusion, inaction, and lack of any coordinated response.
These are some risk Papa met in the beginning.
Measuring those risks
Wherever possible, risk should be measures both in order to understand the probability of a risk event occurring and also to understand the size of the impact should it occur.
According to the degree of impact of risk we can measure the risks.
In the risk 3, we know grape is easy to perish, if Papa Rondo doesn't have grape, he can produce wine; it must a serious impact to his factory.

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