Risk Management: A Case Study Of Sappi

* There are three (3) schools of thought regarding risk. The first considers the positive and negative aspects of risk, but sees them as separate. The second group believes that there are benefits from treating threats and opportunities together, while the third school does not label uncertainties, but addresses uncertainty as part of “doing the job.” Argue the value of having a risk strategy despite the cost associated with it. Include an example to support

Risk literature often separates 'risk ' from 'uncertainty ', defining the risk as a measurable probability that something will happen, however, even where experts claim they can give an exact probability value to a risk, there is always a possibility that the experts may be wrong (Hansson 2002 p4). In common usage the words 'risk ' and 'uncertainty ' are often synonymous (Lupton 1999 p9)

Background- In its most basic sense, risk management identifies, allows assessment, and prioritizes risks that are associated and central to an individual project or organization. Risk management allows the organization to be proactive in preventing or mitigating risks, for improving certain processes within the organization, and with the hope of preventing fiscal exposure. However, in almost every organization there are risks individuals are unique and do not always perform at a high level of safety; mechanical or design failures exist, construction projects have supply or labor issues, there are uncertainties in computer or data modification, of course natural disasters, and even deliberate attacks from competitors, etc. Because this is such a common occurrence, national and even international standards have been developed in conjunction with the insurance and regulatory institutions to at least provide basic guidelines to minimize risks risk (International Organization for Standardization, 2009).

“An occasion when one or more consequences (events, outcomes and so on) could occur. Critically (a) those consequences may be harmful and/or beneficial and (b) either the number and /or the extent of those consequences, and /or their likelihood, is uncertain and/or unknown”. (2008, p242)

The term risk has been defined in so many ways by many scholars. The term ‘risk’ itself is very broad to interpret. However, risk is often defined as a threat and it usually brings negative impacts to a person or an organisation. Hansson (2005) claims that many attempts have been made to define risk in a single meaning and eliminate other definitions which are futile and a form of ‘linguistic imperialism’. Since there is no exact meaning of risk, people describe risk based on their own perceptions and purposes. Perminova et al. (2008) and the Association of Project Management (APM) define risk as an uncertain event and exclusively negative (APM, 2006). Ward and Chapman (2003) recommend that project risk management (PRM) is categorized as project uncertainty management. Nonetheless, the term ‘uncertainty’ again brings confusion as there is no single meaning that can successfully define it (Perminova et al., 2008). On the contrary, Kaplan and Garrick (1981) define risk according to public’s risk perception. There are three criteria suggested by the authors such as the failure of that particular event, its tendency as well as the impact of the failure. Although there have been countless struggles to picture risk in a proper way, it is best that the focus should be diverted to a more important issue which is how to manage risk instead of defining it as time may not be on our side.

Defined by Coopers textbook, risk is the exposure to the consequences of uncertainty and has two elements: the likelihood of something happening that has an impact on the project objectives, and the positive or negative consequences of something impacting the project objectives (Cooper, Grey, Raymond, & Walker, 2005)

Risk management is the term applied to a logical and systematic method of establishing the context, identifying, analyzing, evaluating, treating, monitoring and communicating risks associated with any activity, function or process in a way that will enable organizations to minimize losses and maximize opportunities. (Lecture notes)Risk Management is also described as 'all the things you need to do to make the future sufficiently certain'. (The NZ Society for Risk Management, 2001)

The current era has opened a platform where organizations which cling to affirmative strategies prosper in their respective endeavors. However, there are some vital factors which ought to be considered by the management before they implement policies within their working forces. Therefore, decision making is crucial whenever an organization wants to beat all odds in any competitive business platform. Risk management entails the ability to analyze financial risks and the evaluation of major strategies that can help prevent or minimize the impacts that might pop up. Just to mention, every business is coupled by several aspects that can either boost operations or affect it negatively. Firms and business people who can identify major financial risks at the correct time can achieve extensive success. This is because they can formulate constructive plans which can fetch affirmative results. The purpose of this paper is to analyze and reveal why risk management is portrayed to be everyone’s business.

Risk is a threat of destruction, injury, liability loss or any other negative incident caused by external or internal environments. Risk is unpredicted and nobody can guess it might happen in the near future. All of the projects exist risk and the project manager is responsible to identify those risk, which is a part of risk management planning process. Risk management is the procedure of distinguishing risk and reduce risk level. The risk management methodology decides the actions, strategies, instruments, and group parts and obligations regarding a particular task. A good risk management suggests control of possible future destruction and precautions for that risk. The risk management plan represents how administration will be organized and performed on the venture. As a management procedure, risk management is utilized to identify and preserve a strategic distance from the potential cost, timetable, and implementation or specialized dangers to a framework, take a proactive and organized way to deal with negative results. The risk management approach and arrangement operationalize these administration objectives.

I will be examining PetroSA’s risk management strategies with application of risk management model elements. PetroSA is suitable company as it has many risks in the business environment, it is a kind of company that has to work with the knowledge of possible incidents in the firm. By identifying risks I will be looking the possible mitigation responses. PetroSA has its own risk management and safety committee which makes it easy to apply the risk management function.

In researching for this assignment, I read several articles relating to the subject matter and remarkably, each article addressed the topic in very similar ways. Fundamentally, the articles established a framework for identifying and addressing issues that could rise to the level of risk. Similarly, the reading assignment, lecture, and articles all stated that while risk cannot be avoided it can be subdued or minimized if dealt with correctly and timely. Further, the lecture and articles stated some risk is good for business operations, but organizations are charged with determining whether the risk is worthy of the investment.

Risk can be defined as “The possibility of a (negative) event occurring”. Risk and uncertainty go hand in hand. When you are certain about something that you do then there is less or no risk involved. There is more risk when there is uncertainty about a particular outcome and you still go for it.

Risks are sometimes described as “known-unknowns” (APM, 2012): events which may happen, but may not. "Risk Management is focused only on those uncertainties that have the potential to impact the achievement of one or more objectives of the organization" (Murray-Webster and Williams, 2010). This means that risk management should not address all risks, only those relevant to the project objectives.

Risk management is the process of the measurement, assessment and strain strategy of risk. The perfect risk management is a series of processes whose priorities are are arrayed already. The ideal risk management makes the events that can cause the biggest loss or are most likely to happen can be processed priority, while the ones whose risk is relative low are post-processed. With the development of economic globalization and the enterprises, the risk has become complicated and diversified increasingly. The importance of risk management has become prominent increasingly. Risk management includes identification, measurement and control of risk. Due to the negative impact of the risk, many large enterprises, institutions and

One well accepted description of risk management is the following: risk management is a systematic approach to setting the best course of action under uncertainty by identifying, assessing, understanding, acting on and communicating risk issues. In order to apply risk management effectively, it is vital that a risk management culture be developed. The risk management culture supports the overall vision, mission and objectives of an organization. Limits and boundaries are established and communicated concerning what are acceptable risk practices and outcomes. Since risk management is directed at uncertainty related to future events and outcomes, it is