Explain what is meant by the “Risk Event Chain”. Why is an understanding of this concept important in the completion of a risk assessment?
A risk event chain includes four major components: threat, crisis, disruption, and impact (Engemann & Henderson, 2014). The understanding of the event chain is vital for successful risk assessment. Ideally, it can help recognize the threat and avoid the occurrence of the risk event. In the majority of cases, however, it enables the identification of risks or even threats and avoids the disruption of the process or the impact (at least partially).
Identify and explain an example of a quantitative impact of a disruption. Next, identify and explain an example of a qualitative impact of a disruption. Why is it beneficial to consider both qualitative and quantitative impacts?
The quantitative impact of a disruption is evaluated in numerical data (Wong & Shi, 2014). It helps managers to identify particular outcomes of the disruption. These can be evaluated in terms of the rate of sales, revenue, and so on. A toy production process disruption can be evaluated in terms of the number of toys that were not produced or the time needed to produce the necessary lot. The qualitative impact of disruption can be manifested in the loss of reputation, employees’ morale, and so on. An example of a toy producer is also relevant. In qualitative terms, the managers will be interested in the way the partners’ views concerning the company changed. It is essential to take into account both types of impact as it enables managers to use the most effective strategies aimed at mitigating the risk impact.
Identify and describe an example of a “multiple crisis event”. What are the challenges to estimating the impact and risk treatment of a multiple crisis event?
The multiple crisis events is a set of crisis events that became a result of a crisis event. Such natural disasters as hurricane Katrina that hit New Orleans or the 2011 earthquake in Japan are proper illustrations of the multiple crisis events (Engemann & Henderson, 2014). Thus, the crisis, even the earthquake in Japan, was a considerable crisis event that had numerous adverse effects. However, the tsunami caused by the earthquake had a more significant impact on the region. One of the most serious impacts was the accident at the nuclear plant. The major challenge in estimating the impact of the multiple crises even is the difficulty in identifying crisis events that may follow the primary event. It can be difficult to estimate the probability of possible events.
Risk Acceptance is a risk treatment approach. What potential issues are created when organizations make multiple, successive decisions to accept risk in a given system?
Risk assessment can be an effective treatment approach, but it also poses some threats if used successively (Graham & Kaye, 2015). New conditions can come into play, and the risk can become more severe. It is essential to assess the risk each time to make sure that the acceptance approach is the most appropriate method. The impact of the event can be more substantial, which requires the use of another technique.
Explain factors that influence decisions about Risk Treatment options. For example, what conditions might lead an organization to pursue risk reduction instead of risk avoidance?
When choosing a risk treatment approach, it is critical; to consider a number of factors. These factors include the probability and frequency of occurrence, the impact, the resources needed to avoid or mitigate the risk outcomes, the threat to safety, and so on. The reduction approach should be chosen as it is clear that there are the necessary resources to reduce the probability or the impact of the risk event.
However, if these resources are insufficient, it can be better to employ the transfer method. Another facility can have the necessary resources to mitigate the risk outcomes. Sometimes, the resources needed to avoid the risk are immense, while the risk outcomes are not significant. Instead of risk avoidance, it is possible to utilize the reduction approach. This will enable us to allocate funds wisely and focus on more frequent/probable/serious risk events.
What is a benefit of taking multiple perspectives?
It is essential to take multiple perspectives as this enables managers to estimate risk events, their impacts. It also helps prioritize risks and choose the most appropriate treatment approach. Thus, when using asset-based, vulnerability-based, process-based perspectives, the manager can estimate quantitative as well as qualitative impacts. The
How can Risk Assessment Perspective influence the selection of particular Risk Treatments?
The risk Assessment perspective often affects the process of selection of a risk treatment. Thus, when the manager employs the asset-based perspective, risk transfer can be a common method. For example, the company may choose to insure its property rather than try to develop strategies to mitigate the risk impact (Tucker, 2014). The company does not have to spend funds to acquire the necessary resources. However, if the risk event occurs, it will obtain certain funds to address the outcomes of the risk event. When the process-based perspective is utilized, the company is likely to choose an avoidance strategy as it will ensure minimum disruptions in the supply chain.
How might differences in perspective affect viewpoints on risks to information?
The perspective adopted in an organization may also affect the opinion concerning risks to information. For example, in terms of the asset-based perspective, information is viewed as one of the assets. Thus, risks related to information resources are also considered in detail. The vulnerability-based perspective also presupposes significant attention to information, which is regarded as one of the aspects exposed to various risk events. At the same time, the objective-based perspective focuses on the outcomes. The manager may pay less attention to information, which is not seen as one of the major assets. Since the process-based perspective is mainly concerned with the processes that take place, information is seen as a part of a process. Certain attention is paid to assess risks related to information.
Engemann, K.J., & Henderson, D.M. (2014). Business continuity and risk management: Essentials of organizational resilience. Brookfield, CT: Rothstein Publishing.
Graham, J., & Kaye, D. (2015). A risk management approach to business continuity: Aligning business continuity and corporate governance. Brookfield, CT: Rothstein Publishing.
Tucker, E. (2014). Business continuity from preparedness to recovery: A standards-based approach. Waltham, MA: Butterworth-Heinemann.
Wong, W.N.Z., & Shi, J. (2014). Business continuity management system: A complete guide to implementing ISO 22301. Philadelphia, PA: Kogan Page Publishers.