Choose Essay Example | Topics and Well Written Essays - 2500 words

Choose - Essay Example The study aims to investigate that how risk is challenging and can be undermining for organizations if not dealt or encountered at the first level. How risk can be assessed, dealt and managed are further areas of study in this report. The objective here is to understand the risk in the wider perspective in order to apply the models and principles of risk management effectively. The Conception of Risk in Organizations According to the contemporary literature, risk is an uncertainty, which revolves around every modern organization. It is an uncertainty which organization carries throughout its life period. The periods of success and certainly the period of failures are filled with risk and uncertainty (Damodaran). Risk is actually an effect or a consequence that attaches to an organization due to its environment. Environment is one major source of risk and therefore, it is the environment that inputs risk in organization’s structure, culture and system altogether (Damodaran 5). Risk is actually a state of vulnerability. When organizations are vulnerable to their environments, they carry the influential factor of risk or uncertainty. Actually, all organizations are vulnerable, but only those are less vulnerable or more protected which know how to deal with the risk’s influence (Pathak 570). ... Similarly, the cultural risk, the decision making risk, the risk in the leadership style of practice, and risk in the management style are certainly internal risk influences. From this understanding it can be elaborated, that risk management in organizations is all about managing these two types of risk influences - internal and external risk influences. When both internal and external risks are managed or controlled, the organization is freer on its progress, performance and deliverance states. So the need is to focus on these two types of risks (internal and external) which evolve with organization system intangibly and precisely (Damodaran 8). The example of risk can be taken from an organization, which is moving and expanding to a new international market. The risks of the environment of that new market will certainly be the risk channelized to the expanding organization (Andersen and Schroder). The organization will be catching political, social, economical and cultural risks fr om the environment of the new market. Another example of risk can be taken from the organization merging with a new organization. The risks of the merger will directly influence both the organizations. In that case, risk will be divided, but still left for both organizations to manage it collaboratively (Andersen and Schroder 10). When is a Risk not a Risk? Risk as a Threat In the modern perspective, risk is described as a highly probable event. As the risk’s probability is higher the probability of its consequences is higher too as it is a foreseen and known event in modern organizations (Buehler and Freeman). By knowing the risk and risk consequences,