Risk

Risk Identification

The definition of risk identification

Because of the pervasiveness of risk and its significant adverse economic effects, people try to find an effect way to manager the risk. There are a lot of definitions of risk management, according to Williams and Heins (1971); risk management can be defined as the minimization of the adverse effects of risk at minimum cost through its identification, measurement and control. In a broad sense, all business and family decision makers are risk managers. Risk management from the 1930s began to grow. After1938, the American enterprise began to use scientific methods, and gradually accumulated a wealth of experience to manage risk. The global risk management movement developed in 1970. The last two decades, the risk management gradually matures. Risk identification as the first step of the risk management and it’s also the basic step; people should identify the risks correctly, and then can select appropriate and effective methods of treatment. In this essay will focus on the business risk management, the content, method and some basic principle of risk identification will be discuss, also some limitation of enterprise risk identification will be described.

The content of risk identification

The risk managers need fist a checklist of all the losses that could occur to any business and then discover which could occur in he’s own business to identify all the potential losses. Some of the main content of risk includes environmental risk, market risk, technical risk, production risk, financial risk and personnel risk. Environmental risk refers to the economy risk occur by the external environment accidental changes the enterprise scheduled production plan. The external environment changes include the national macroeconomic policy change, the enterprise have accident risk loss. The risk occur enterprise's production and operating activities against the external environmental requirements. Social culture, moral...