Risk Management Process : Identifying The Risk

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There are five steps of the risk management process: identifying the risk, analyzing the risk, evaluate the risk, treat the risk, and monitor or review the risk (“What Are the 5 Risk Management Process Steps?”). Step one would be to identify the risk. This step involves finding all the possible potential losses. There are some major issues that can cause a risk in risk management, such as, worker compensation, climate change, and increasing cost. A risk manager can use a variety of information to identify the loss exposures, such as, physical inspection, financial statements, and questionnaires. There are a number of important loss exposures that can be identified using a variety of information including: property, liability, business income, human resources, crime, employee benefit, foreign, and intangible loss exposures. (Rejda and McNamara, 46) All of these important loss exposures can help a risk manager to identify and avoid a risk. The second step of the risk management process is to analyze the risk. Once the risks are identified, you can determine the chance and the consequences of different types of risks. It is also important to understand how to manage the risks correctly. The third step of the risk management process is to evaluate or rank the risk. In this step, it requires an estimation to the frequency and severity of loss. Frequency of loss, also sometimes referred to as likelihood, refers to how often a particular unpredictable outcome will happen or is
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