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Describing Risk-Based Decision Making In addition to participating in two forums in week seven, the final assignment is to complete a four to five page paper on risk-based decision making. What is risk-based decision making? Risk-based decision making is an organizational procedure that processes the likelihood of unwanted outcomes into a structured format to better help stakeholders make informed choices. This paper will draw upon the various lecture presentations from weeks one through seven, the class textbook and other applicable resources to more fully describe how risk-based decision making requires consideration of the following questions: • Can risk be reduced? • What are the interventions available to reduce risk? • What combinations of controls make sense? Can Risk Be Reduced What is risk? Risk is not a peril, rather perils are the causes of risk. Perils should not be confused with hazards, which are contributing factors to perils. Broder and Tucker suggest that risk is limited to the uncertainty of financial loss, the variations between actual and expected results, or the probability that a loss has occurred or will occur (2012, p. 3). Risk is further classified as “speculative”, such as the potential for both loss and gain that exists in gambling, and “pure risk”, equating to any loss/no-loss situation to which insurability may apply. Risk can be further divided into how it applies to three common categories: personal (people assets), property (material assets) and liability (legal issues). Can risk be reduced? Yes, risk can be reduced as part of the risk management process. There are general philosophies and specific tools and methods that can be employed to better manage the risk associated with the hazards facing a... ... middle of paper ... ...er, J., & Tucker, E. (2012). Risk analysis and the security survey (4th ed.). Waltham, MA: Butterworth-Heinemann. Bullock, J., Haddow, G., & Coppola, D. (2013). Introduction to homeland security principles of all-hazards risk management. (4th ed.). Waltham, MA: Butterworth-Heinemann. Haddow, G., Bullock, J., & Coppola, D. (2011). Introduction to emergency management (4th ed.). Burlington, MA: Butterworth Heinemann. Braziel, C. (Director) (2014, January 6). Introduction to Risk Management Course. Risk Management - EMGT-4215. Lecture conducted from National Labor College, Silver Spring, MD. National preparedness goal. (2011). Washington, D.C.: The U.S. Department of Homeland Security. Tucker, G. (Director) (2014, January 6). Risk Management Powerpoint Week 1 Chapter 1 and 2. Risk Management - EMGT-4215. Lecture conducted from National Labor College, Silver Spring, MD.
Homeland Security. (2008, 12). National Incident Management System. Retrieved 10 22, 2011, from FEMA: http://www.fema.gov/pdf/emergency/nims/NIMS_core.pdf
O'Rourke, M. (2011). Risk on the field and in the headlines. Risk Management, 58(3), 37. Retrieved April 24, 2012, from the EBSCO Host database.
Haddow, G. D., Bullock, J. A., & Coppola, D. P. (2014). The disciplines of emergency management: Preparedness. Introduction to emergency management (Fifth ed., ). Waltham: Elsevier.
Bissell, R. (2010). Catastrophic Readiness and Response Course, Session 6 – Social and Economic Issues. Accessed at http://training.fema.gov/EMIWeb/edu/crr.asp
Mancock, I., Tristan, C. & Lunn, J., 2004, Introduction to Emergency Management, CD ROM, Charles Sturt University, Australia.
Perry, R. W., & Lindell, M. K. (2007). Disaster Response. In W. L. Waugh, & K. Tiernery, Emergency Management: Principles and Practice for Local Government (pp. 162-163). Washington D.C.: International City/County Management Association.
Haddow, G. D., Bullock, J. A., & Coppola, D. P. (2010).Introduction to emergency management. (4th ed., pp. 1-26). Burlington, MA: Butterworth-Heinemann.
Rousmaniere, Peter. “Facing a tough situation.” Risk & Insurance 17.7 (June 2006): 24-25. Expanded Academic ASAP. Web. 23 March 2011.
Hillison, D. & Hulett, D. (2004). Assessing risk probability: Alternative approaches. Retrieved 22 November 2016 from http://www.projectrisk.com/white_papers/Assessing_Risk_Probability-_Alternative_Approaches.pdf
National security in the United States is extremely important and requires extensive risk management measures including strategic, exercise, operational and capability-based planning, research, development, and making resource decisions in order to address real-world events, maintain safety, security and resilience (Department of Homeland Security [DHS], 2011). The national security and threat assessment process consists of identifying the risk and establishing an objective, analyzing the relative risks and environment, exploring alternatives and devising a plan of action for risk management, decision making and continued monitoring and surveillance (DHS, 2011). Identifying risks entails establishing a context to define the risk, considering related risks and varying scenarios, including the unlikely ones, which then leads to the analysis phase; gathering data and utilizing various methodologies and analysis data software systems to survey incidence rates, relative risks, prevalence rates, likelihood and probable outcomes (DHS, 2011). These two key phases lay the foundation to explore alternatives and devise action plans. Threats, vulnerabilities and consequences (TCV) are also a key component of many national security risk management assessments because it directly relates to safety and operation capabilities, but the text stress that it should not be included in the framework of every assessment because it is not always applicable (DHS, 2011).
Perry, R.W., Prater, C.S., & Lindell, M.K. (2006). Fundamentals of Emergency Management. Retrieved from http://training.fema.gov/EMIWeb/edu/fem.asp.
Risk exposure not only includes legality issues, but also incorporates quality and safety risks, reputation risks, health risks, and mostly importantly, financial risks. The reality is that the above stated risks are interdependent and can have drastic effects on the administration of an organization. The reason risk management is such a daunting task stems from its ambiguous nature (Burke, 2013, p169). Risks are difficult to detect because of the interacting pieces that generate the likelihood of a risky result. Measuring risks also proves to be a seemly convoluted process due to the subjectivity behind the matter. Risks can only be measured as far as the human brain can process the complex parts and contingencies involved. Finally, risk mitigation also poses a problem as finding a solution to an unknown problem is just as difficult as identifying the issue at
In doing that, managers should be able to identify risk that can create uncertainty and affect their operations, create initiative and culture awareness about it so that it can be managed effectively. This risk identification awareness should be seen flowing through the organization from senior management level down to the junior ranks. Until management and boards understand their roles in identifying risk levels and making efforts to pursue it, it will be difficult for corporations to fulfil the risk oversight roles (Coso.org,
Zwikael, O and Ahn, M. 2011. The effectiveness of risk management: an analysis of project risk planning across industries and countries. Risk Analysis, 31 (1): 25-37.
As has been discussed before, risk identification plays an important part in the risk such as unique, subjective, complex and uncertainly. There are no two identical leaves in the world; similar, there are no two exactly the same risk either. Hence the best risk manger could not identify risk completely. Besides, risk identification assessment is done by risk analysts. As the different level of risk management knowledge, practical experience and other aspects between individuals, the result of risk identification may be difference. Furthermore, the process of identifying risk is still risky. Once risks have been identified, corporations have to take actions on limiting risky actions to reduce the frequency and severity of risky. They have to think about any lost profit from limiting distribution of risky action. So reducing risk identification risk is one of assessments in the risk