Positive and Negative aspects of risk
Planning for Risk
Positive and Negative aspects of risk
Advantages
By considering, the positive and negative aspects of risk and seeing them separate helps in understanding the real threats and setting them aside or taking appropriate action to deter them. It allows thinking of risks as a threat and an opportunity.
Positive and Negative aspects of risk
Disadvantage
This school of thought seems reluctant and unrealistic since most people see risk as a threat rather than an opportunity.
Benefits from treating threats and opportunities together
The advantage in this school of thought is that it is daring and always ready to take risks while expecting anything out of it. Although risk is mostly considered as a threat, this school of thought seems to give it a 50:50 thought.
Unfortunately, when the threat occurs, people tend to lose confidence in their projects.
Addressing uncertainty eliminates risks that may have been experienced thus preventing the bad consequences of risks. This is a careful approach to risk, which does not encourage investment or trying new things.
2. If there is an opportunity that would help in saving four weeks on a plant renovation project and a threat that would make the project to lose a week there would be the following outcome. Suppose the threat happen but not the opportunity, a week will be lost which is unfortunate but if they both happen, three weeks shall be gained. However if threat can be eliminated and the opportunity happens then there will be a four week gain.
3. It is important to initially identify risks and opportunities then align with the corporate strategy and viable within the organization’s structure. Evaluation ay be done by ascertaining the expected profits, expected value added or even using some measures such as Return on Investments which may aid in management decision making process. Acceptance of risks may lead to a more superior return for example; a bank would assume credit risk while lending money instead of considering the cost associated with it.
