Risk Perception and Analysis

Question: Explain about the Elements of Risk Management. Answer: A business risk is one of the prime factors to be considered in the creation of any kind of work structure. The risk might be physical in nature in which case, it is known as an energy risk. On the other hand, the risk might be non-physical in its nature in which case, it is classified as a non-energy risk. In any case, a risk is a crucial factor to be analyzed. While the physical risks generally affect the workforce and other such factors, the non-physical risks affect the financial and operational capMining is one of the most importantabilities of the concerned organization(Alexander, 2008). The non-physical risks span a large number of departments where each of the sectors have a risk associated with it. Such risks may include strategic risks, financial risks, and compliance risks among others. The mining sector is one of the sectors that have a lot of risk factors associated with it(Brebbia, 2013). Mining consists of a huge amount of manual work which leaves the door open for a l arge number of physical or energy related risks. The energy risks in this case are however, not the only concern for the organization. There are a host of other non-energy risks as well that await anyone who steps in this sector. Area of Risk Examples Response Type of response Governance The team in charge of governing the project may fail to meet the responsibilities Orientation and Training The change in practices would reduce the overall risk. Insurance of the directors The risk transfer Financial or non-energy risks The building projects require a large amount of funds and as such, projects may face a lack of finances The planning in the financial department needs to be done beforehand Change in work practices need to be brought about in favour of ones that encourage financial planning(Burger, Graeber and Schindlmayr, 2007). Fraud Creation of financial systems Change in work habits need to be brought about Energy risks The Equipment at the workplace may be unsafe Commitee for official health and safety that monitors all the equipments and compliances Change in work practice would help in the reduction of the risks. The labourers or other staff may be involved in an accident Insurance Transfer risk Production Process The finished product is not up to the mark Creating a framework Monitoring the work processes and the quality of the raw materials used Falling Share Prices The prices of the shares of the company keep on decreasing Creating a framework for the company to perform in the competitive market. Keeping up with the market trends and forming various strategies for the performance of the organization. Problems with the suppliers There arises certain ideological conflicts and conflicts of interests with the suppliers Creating a trusted supplier network Creating a network of suppliers that work with a common interest with the organization. The risk to the property and the environmental risks are two of the risks that need to be taken seriously and can be added to the list of the aforementioned risks. The property risks can mean the risk of fire and other such hazards that may be present. The raw materials and the equipment are at a constant risk of the dangers from the hazards of property damage(Crouhy, Galai and Mark, 2000). The property damage can also happen through natural calamities which include earthquakes and other such events. However, the organization must be ready for the means to combat these risks. There should be provisions of fire extinguishers and other emergency equipment. The organization should also keep its properties insured in case anything happens(Foundations of energy risk management, 2009). The environmental risk is one of the risks to be taken seriously as the reputation of the company depends on it. This can be managed by complying with all the standards that regulate the functioning in this department. Mining is one of the most important industries in the modern age with the majority of the raw materials for the various industries coming from this particular sector. The mining industry worldwide employs thousands of laborers who work in the mines for a living. Prior to the invention of the electrical equipment, there was a considerable loss of human life in the mines(Geman, 2008). The mines are notorious for the formation of innumerable inflammable gasses. However, the need for light to work in any situations gave rise to the need for a lamp of any kind prior to the invention of the electric bulb, loss of lives in mine explosions was not uncommon as the slightest mistake would cause a great accident. In this case, the sanctity of the human life was preserved by the electric equipment that were being used after they had been developed. The mining industry took the energy risk quite seriously when there was an increased expenditure in the case of electrical equipment that were being used all over in each and every mine(Hammond and Coppock, 1990). The legal benchmarks and safety standards have been set down for the operations in this industry. As a result, it also becomes compulsory to comply with those things in order to ensure a smooth functioning and also the prevention of the loss of human life. Human life especially labor is an important part of any industry and as a result, the energy risk of such a magnitude is indeed supposed to cause a big impact on the concerned organization or the industry as a whole(Holmes, 2002). An accident of this kind possesses a high consequence value and the other factor is that it also occurred frequently. The expenditure of $600,000 on the provision of intrinsically safe electrical equipment in the mine is thus a welcome step. The expenditure of this kind would, in fact, prove beneficial both to the organization and the laborers as well. The organization would be benefitted as the energy risk would be effectively mitigated. T he amount of $60,000 might look to be huge at a single glance and might be done for to make way for other developments by most of the project managers. However, this is one of the mistakes that most of them make. The safety measures are one of the factors that cannot be replaced. The safety measures make for a significant amount of the overall volume of the compliance laws and as such, the aspect needs to be taken seriously. We have already seen the effect of the non compliance with the safety standards in the case study. The accidents cause more damage than the expenditure that would be incurred in complying to the standards. In such a case, the expenditure would also be beneficial from a business point of view. Finally, there is no substitute for human life and as such, it must be protected. In such a case, complying with the rules to ensure the safety of the workers is important. References Alexander, C. (2008).Market Risk Analysis, Quantitative Methods in Finance. Hoboken: John Wiley Sons, Ltd. Brebbia, C. (2013).Risk analysis. Southampton: WIT Press. Burger, M., Graeber, B. and Schindlmayr, G. (2007).Managing energy risk. Chichester, England: John Wiley Sons. Crouhy, M., Galai, D. and Mark, R. (2000).Risk management. New York: McGraw Hill. 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