Discussion of Positive and Negative Risks
A risk is an uncertainty that is likely to cause a financial loss in future. There are negative and positive risks in an organization. Negative risks are the unwanted conditions, which causes severe problems for the company such as financial loss. Positive risks are opportunities for a firm to increase their efficiency such as finishing a project before the stipulated time. According to Ricciardi, negative risks are mitigated while the positive risks are taken advantage of; for instance, during a construction a company can foresee the lack of construction materials from the contacted company (2014). The firm should mitigate the situation by contracting various companies. Positive risks such as finishing a project on time can enable a company to schedule another project to utilize the surplus materials. However, positive risks should be critically accounted for, since, they can be a source of the adverse risks; for instance, the employees can steal the surplus materials (Ricciardi, 2014).
Threats and Opportunities
A risk management plan is a program that combines tools and techniques for identifying evaluating and altering the threats, and exploring the opportunities that can improve the project. Opportunities are identified, analyzed, planned, and managed to improve the company efficiency; while threats are evaluated to decrease the losses for the enterprise. A risk management plan is of paramount importance to any organization and should be addressed appropriately for any organization to be successful. Risks are a share of business, and their evaluation gives the company numerous benefits. A risk strategy enables the company to identify all the potential hazards in the firm. It is pertinent to note that a company cannot mitigate a risk they do not know. A plan enables the business to assess the impact of every risk that a company might get, and thus, allow prioritization and mitigation depending on the severity of risks (Monahan & Schwarcz, 2013). The risk management strategy is thus decisive to the company; since it enables it to ease the financial burden that a company would otherwise face. For instance, when a company realizes a possibility of increased sales volume, they plan to increase the supply of goods and services to boost sales. On the other hand, if the company predicts reduced sales volume they will reduce production, which will then reduce the costs of handling the products.
References
Monahan, A. B., & Schwarcz, D. (2013). Limiting the ACA's Threats to Small Group Health Insurance Markets. Risk Management and Insurance Review, 16(1), 25-34.
Ricciardi, F. (2014). Business Networking: Possible Positive and Negative Impacts on Innovation and Excellence. Innovation Processes in Business Networks, 5-15.
