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The Benefits of Risk Managements

In: Business and Management

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The Benefits of Risk Management

Benefit #1
One potential benefit of implementing risk management is that it enables better informed and more believable plans, schedules and budgets. The FMECA (Failure Modes and Effects Criticality Analysis) risk management technique is a qualitative method that is carried out by a single analyst. This technique is used to analyze the potential failure of equipment or systems. The analyst must have a thorough understanding of the system under investigation. The technique identifies areas of the project that have a high risk for failure so that resources can be used effectively on the problem regions. For a company like Yahoo!, which has a high focus on technology and an expansive database system, the FMECA technique would be extremely beneficial. Isolating the problem areas before implementing new hardware or a new system will provide the information they need to plan out such a project and make informed decisions regarding schedules and budgets.
Benefit #2
Risk management discourages the acceptance of financially unsound projects. The use of the probability-impact table technique is an effective method for identifying the potential impact of risks. The risks are mapped out on a table and rated on a scale according to their probability and their impact on the company. Basically, it would identify what the possible risks are and how bad it could be if they happened. The risks being analyzed would depend on the project. If Yahoo! Is considering the implementation of new software, they would need to analyze the probability and impact of risks such as system hacking, computer viruses, loss of data, natural disasters, and malfunctions. Each of these risks have potentially serious consequences and must be analyzed to determine their impact. Some risks are more easily controlled than others, while others, like natural disasters cannot…...

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