Risks And Risks Of Risk Management Practices

1360 Words6 Pages
The aim of risk documentation is to provide security and information to users, such as management, so that they can make effective decisions (HB 436:2013, pp. 88). AS/NZS ISO 31000:2009 is the standard for risk management principles and guidelines in Australia (HB 436:2013, pp. 2). HB436:2013 provides guidance to the application of AS/NZS ISO 31000:2009 (HB 436: 2013, pp.2). In 2013 HB436:2004 was updated, one of the new changes states that risk management practices should be able to traceable, however, a complete log or record of risks is not necessarily required (HB436:2013, pg. 88). This essay will discuss the potential risks and potential decrease in risks which may result due to more flexible documentation options.

Many managers make
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It could be hard for stakeholders to understand risks if there is no clear documentation of particular risks.
For risk management is to be effective, it has to be measured, reviewed and monitored (ISO AU/NZS 31000:2009, pp 14). This could also be very difficult without a good understanding of each particular risk.

It is important for organisations to have a good understanding of their risks because they are often held liable for the actions of their employees (Fadun 2013). If risks are not well documented, it would be very difficult for different employees as well as management to all have the same understanding of the risks that face the organisation. If risks are not understood, they cannot effectively be prepared for or monitored.

Risk disclosure reduces uncertainty in investors, because it creates trusts between investors and the organisation (Ismail, Rahman & Ahmad 2013). If risks are not effectively disclosed and a risk eventuates as a result of inadequate planning, it can affect the financial outcome of an organisation, because investors will no longer trust them (Ismail, Rahman & Ahmad 2013).

Risk disclosure can also improve the quality of strategic planning (Ismail, Rahman & Ahmad 2013). If an organisation has to disclose a risk they may be more likely to plan more effectively for it, because they have acknowledged that it could be an issue.

Organisations usually only disclose information which
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