Risk Management Techniques
BUS 401: Principles of Finance
Dr. Tiffanie Deloach
December 26, 2017
Risk management is a process of
evaluating overall goals of an organization against the risks attached to planned
activities. Steps have been assembled to
identify and analyseG1
the uncertainties associated to achieve this aspect of running a business. This paper discusses the techniques developed
by Dr. James Kallman, compared to those of other risk management experts. G2
Kallman observes that risk management is a decision-making
process that combines several procedures in the operations of a business
(Kallman, 2005). Risk management
involves organizing, planning, controlling, leading and allocating resources. The technique by Kallman is one that empowers
the risk manager to focus on to the target path in operations. It offers a guide to the business for
achieving its goals by minimizing possible obstacles to an organization’s
Risk managers are expected to make the decision G3 on
an organization’s successful path based on evaluating the available
resources. The decision-making process
is developed through analysing and evaluating the organization’s resources,
internal and external environment, the goal and possible/probable risks
involved. This level of analysis and
evaluations opens the management’s viewpoint to adopt the best plan to attain
The processG4 ,
as risk management technique, provides a guide to the most effective actions to
take towards a set of goals. The process
involves risk managers overseeing possible outcomes in a segmented process that
allows for flexibility desirable where the environment is dynamic and
subtle. Risk managers are expected to
engage proactively G5 to
avoid haphazard action taking. The
process technique is like Jegher’s financial risk management strategy that considers
the likely impact of various steps taken.
It advocates for realistic steps in approaching target goals.
goals in these two measures are observed to re-align the target actions to
reflect changing condition with a plan that is predictive of the target
goals. This technique guarantees that
the decisions and actions taken will not be hampered by changing
condition. They will also not require
uncoordinated face-saving measures in the organization’s operations.
G6 G7 G8
Goal setting serves to provide focus to operations
within an organization by encouraging an aspect of shared culture and
cohesively bringing together the organization’s resources. Goal setting is achieved through planning
where goals are communicated and the resources to achieve them are made
available. Risk management according to
Mikes (2008) requires the planning technique G9 to
increase chances in their attainment.
The planning process also highlights the organizations potential towards
meeting the objective.
Organizing technique serves to supplement the planning
technique through delegating role to team members and availing resources. The risk management perspective of every
organization can only achieve efficiency in meeting set goals by organizing the
available resource to their optimal use.
A process that has been arranged optimally is likely to reach set
targets with the desired accuracy as opposed to one that has no organizing
aspect (Jegher, 1999).
Kallman’s technique in organizing incorporates the
organization’s internal and external resources.
These techniques acknowledge that internal resources and manpower alone are
not sufficient to ensure efficient and effective operation. The incorporation of external resources as
well add objectivity in addition to providing a broader perspective in
operations (Jegher, 1999).
To set a sense of
direction leadership technique is incorporated in risk management by Kallman. The harnessing of appropriate leadership
skills is desirable since the teams need to be motivated and dedicated to the
attainment of the set goals. Leadership
will be able to anticipate likely objections to changes needed for the targets
and mediate where conflict is likely to arise.
The measure sets in a sense of tolerance as is expected of an ideal
leader where risk is to be averted. Good
leadership will guarantee a focused perspective towards set goals and
dedication from team members even when difficulties seem to be fast approaching.
G11 G12 G13 G14
Control is achievable through measurement of
activities undertaken and step-by-step results realized (Mikes, 2008). This technique gives the process of risk
management the ability to oversee performance and re-orient planned
measures. Through the reports, risk
identify measures that need to be stepped up and process that need to be eliminated
given the projected outcomes
Resource allocation techniques serve to reduce waste
and ensure optimal efficiency. Risk
management’s core target is to reduce the organization’s losses and optimal
resource allocation guarantees this goal.
Risk managers, according to Mikes (2008), face the challenge of achieving
a balance of resource shortage against the high-level needs of their
programs. This challenge is addressed
through planning guided by carefulness in resource allocation.
A thorough understanding
of how risk is a large part of today’s business operation concern is seen in
Kallman’s risk management techniques.
Kallman’s assertions are related to the most effective measures of
decision making in an organization.?
G17 G18 G19
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capital: Review of the empirical literature.
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Jegher, S. R. (1999). Flexible
structure: Managing financial risk. Risk
Management, 46(1), 29-33. Retrieved from
(2005). Managing risk. Risk
Management, 52(12), 46 Retrieved from,
(2008). Risk Management at Crunch Time: Are Chief Risk Officers Compliance
Champions or Business Partners? Rochester, New York.: Harvard Business