Page 247 - RISK Management IC 86

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of similar past events. The others are not calculable either
because they are unique events or their occurrence do
not follow any discernible pattern.

Q2. Risk management involves three elements in a
logical sequence. Discuss with illustrations.

Ans. The three elements involved in a logical sequence are :
(a) Risk analysis - Identification of risk - which requires
a thorough knowledge of organization, the market in
which it operates, the legal, social, economic, political
and climatic environment in which it does business,
its financial strengths and weaknesses, its vulnerability
to unplanned losses, the manufacturing processes,
the management system and the business mechanism
by which it operates.

Any failure at this stage to identified any risk may
cause a major loss which can leave the organisation
exposed to the chance of bankruptcy. Risk
identification provides the foundation of risk
management.

(b) Risk control - risk control covers all those measures
aimed at avoiding, eliminating, or reducing the

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