DALLAS BAPTIST UNIVERSITY
RISK MANAGEMENT- INTERNAL CONTROL PROSPECTIVE
Risk is the degree of probability that the possible outcomes of a particular course of action will occur. And management is the planning, organizing, leading and controlling of human and other resources to achieve organizational goals efficiently and effectively. If we combine the two terms together we have risk management.Ã¯Â¿Â½ The term risk management is applied in a number of diverse disciplines. People in the fields of statistics, economics, psychology, social sciences, biology, engineering, toxicology, systems analysis, operations research, and decision theory, to name a few, have been addressing the field of risk management.
"What is risk management? To many social analysts, politicians, and academics it is the management of environmental and nuclear risks, those technology-generated macro-risks that appear to threaten our existence. To bankers and financial officers it is the sophisticated use of such techniques as currency hedging and interest rate swaps.
To insurance buyers and sellers it is coordination of insurable risks and the reduction of insurance costs. To hospital administrators it may mean 'quality assurance. To safety professionals it is reducing accidents and injuries.Ã¯Â¿Â½ In my own words risk Management is defined as the process of assessing risk (risk analysis) and developing adequate strategies to manage it. In other words, strategies means risk can be transferred, reduced, accepted or avoided. Eliminating and managing risk can be achieved by having adequate internal control in place such as implementing or improving security controls and procedures this will be discussed in great details over the next few paragraphs.
In order to have a good risk management program in place, the first step is to establish the purpose of the risk management program. By determining its intention before initiating risk management planning, the organization can evaluate results to determine its effectiveness. Typically, the...