Organizational Risk Appetite and Risk Assessment
Murray-Webster & Hillson (2012), risk appetite is the amount and type of risk that a firm is ready to take, to meet their tactical objectives within the market. Further, risk appetite is the amount and type of risk a company is willing to pursue at all cost. From the definition, it is apparent that the paper will illustrate in detail on the process that can determine the risk appetite of an organization. It will also discuss on the methods that can perform a risk assessment effectively. The paper is relevant; as it will help, the firm fully counters challenges affecting its services in the market.
Process for determining the risk appetite for the company
Determining the risk appetite for the organization in this case will entail the creation of a risk appetite statement. The document will guide the organizational risk management activities in a more dignified and professional manner. It is true as the statement will be associated with the process of reviewing of the organization’s perspectives and concerns of all stakeholders. Significantly, the document will illustrate on the implications of the current corporate tactics and practices that will ascertain that the organization achieves its objectives to the latter. The risk appetite statement is appropriate for determining the risk appetite of an organization because of its nature to evaluate annual reports and financial statements (Reuvid, 2012). It also deals with board meetings, marketing materials, business strategic plans and customer contracts. The use of a risk appetite statement is appropriate, as it is easy to follow and put into practice for effective feedback.
Methods in performing risk assessment
Performing a risk assessment is essential as it ascertains the firm of ways practiced to counter problems affecting its service delivery in the market. Performance of a risk assessment will entail utilization of a what-if evaluation approach, to identify possible threats within the organization. The use of what-if questions is fundamental as they entail querying what could go wrong and concerning what would take place if the firm does not implement its services as proposed in the market. The type of evaluation is termed as a brainstorming entity and usually undertaken by individuals who have expertise about the areas of operations and process that may be associated with risk related challenges. I believe that the method is appropriate for the issue at hand, because it relates the issues at hand with what needs to implementation for positive results to achievement.
The other method that I will put into consideration is the use of a checklist of known threats and hazards to the firm. The approach is easy to utilize because of its capability to identify the firm’s threats in a professional perspective. It is apparent that the benefit of the method is its quality and the experience of using the method by the user. In my case, I believe that I have enough experience and expertise to use the method, and I will gain positive results while utilizing the tool (Hollcroft, 2016). The two tools are significant as they are appropriate for the objective of performing a well-organized and professional risk assessment approach. The rationale is because I am experienced in using the two methods, hence, assured of coming up with positive results that will favor the services of the firm on the market.