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Effective Risk Management Strategies for Businesses

Learn about pure and dynamic risks, risk management strategies, systematic approach to loss prevention, moral and legal aspects, risk analysis factors, security surveys, and alternatives for handling risks. Understand the importance of evaluating security systems regularly.

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Effective Risk Management Strategies for Businesses

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  1. Chapter 14Loss Prevention Through Risk Management

  2. Pure and Dynamic Risk • Pure risk: The potential for injury, damage or loss with no possible benefits. • Dynamic risk: Risk with the potential for both benefits and losses.

  3. Risk Management • Risk management is anticipating, recognizing and analyzing risks. • Risk management involves taking steps to reduce or prevent such risks and evaluating the results.

  4. A Systematic Approach to Risk Management • Preventing loss through risk management includes: • Risk analysis. • Policy formulation. • Specification of a protection plan. • Follow-up.

  5. Morality and Legality of Risk Management • Organizations that do not have a comprehensive risk management program in place leave themselves open to disgruntled employees and customers as well as to potential civil liability.

  6. Risk Analysis • Three factors to consider in risk analysis are: • (1) vulnerability. • (2) probability. • (3) criticality.

  7. A Security Survey • The security survey (audit) is a critical, objective, on-site analysis of the total security system. • The information needed for a security survey is obtained by observing and by talking to personnel.

  8. Alternatives for Handling Risk • Alternatives for handling risk include: • Risk elimination. • Risk reduction. • Risk spreading. • Risk transfer. • Risk acceptance.

  9. Schedule for Evaluating the Security System • Each component of the security system should be periodically evaluated and changes made as needed.

  10. Summary Questions • What is the difference between pure and dynamic risk? • What is risk management? • What is included in a systematic approach to preventing loss through risk management? • What is the moral and legal responsibility of risk management?

  11. Summary Questions • What 3 factors are considered in risk analysis? • What is a security survey? • How is the information for a security survey obtained? • What alternatives exist for handling risks? • When should components of the security system be evaluated?

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