KPI of the Day – Risk Management: $ Risk exposure
Definition
Measures the total loss in the case of a risk occurring, by factoring in the probability of the occurrence taking place.
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Measures the total loss in the case of a risk occurring, by factoring in the probability of the occurrence taking place.
When thinking about enterprise risk management, managers often regard other organizations for models worth following in terms of strategies for tackling such issues. However, how can you pick the rightful organizations to do so? Although the degree of attention paid to risk management systems is highly variable, you can be confident that one type of organization will always place risk management above many other departments: prisons.
Risk is generally regarded as an element or situation to be avoided, due to its negative impact component. However, risk simply refers to the uncertainty of the outcome an event can generate. In this sense, risk can have positive, as well as negative results. Nonetheless, because it is an area with a certain degree of mystery, risk management is, therefore, not to be overlooked or underestimated.
When events such as terrorist attacks arise, what is often brought to light is the vulnerability of targets, together with the ineffectiveness of governmental authorities, both of these contributing to the large number of victims and to alienating entire nations and governments. What remains is the bitter taste of defeat, of mistrust, increased insecurity and fear.
When entire nations, from the powerful to the modest ones, admit that they cannot stand alone in front of the 21st century crisis events, then what chance do organizations have to overcome the consequences of these upcoming destructive forces? The need to communicate and help one another has allowed for a new offspring of crisis management to rise to power: the transboundary crisis management.
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