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WHAT IS RISK MANAGEMENT?
IMPORTANCE OF RISK MANAGEMENT

by Hitesh Bhasin

The term risk management is used to refer to the identification, the polarization and the analysis of the threats or risks that may affect the capitals and earnings of any particular organization.

This is then followed by the economic and coordinated applications of the resources in order to minimize, control and monitors the impact of any unforeseen events or to maximize the opportunities’ realization.

What is risk management?📌

Risk management is basically a process in which anything that may act as a threat or a risk to the organization is identified, analyzed, evaluated on several factors so that it can be eluded. These risks can arise due to several aspects like financial uncertainty, strategic management factors, legal liabilities, accidents, and natural disasters, etc.

Risks management is also done while making an important investment decision in which the identification, analysis and acceptance or mitigation of uncertainty in investment is done. Risk management is a practice of analyzing potential risks ahead of time.

After that those risks are evaluated on the basis of several factors and finally some precautionary steps are taken so that the risks could be reduced.

The risk management is associated with managing any type of possible risks in a portfolio and then reducing it through diversification. Now in a business one can inculcate many different types of risk especially in the investing world.

Now some of these may include economic factors, competition, and market volatility. Now the entities may also become a factor like in term so their position, their capital, in terms of the risks investment, etc.

For an instance, suppose there is a company say ‘ABC’ which has, say $10,000 in the form of their assets, here the analysis of the risk management will yield the fact that ‘it will not be a wise decision for the organization or the commonly to invest more than $5000 in a stock which is highly volatile.

It is quite essential for the organizations which are into businesses, to assess their risk on a daily basis. Most often it is common for any business to refer back t their previously done risks analysis so that they can decide the type of securities they would be wanting to purchase it or the type of ventures that they will want to invest in also the risks management issued in cases in which the companies are considering to launch some kind of their product line in future or factory expansion.
With the help of risk management, they are able to assess the level of threat of investment before launching the product.

Now in the financial world, risk management occurs everywhere. Mostly it occurs when the low risks bonds are being bought by the investor instead of the riskier corporate bonds. Now many of the financial instruments like ‘options’ or ‘futures’ or ‘money managers’ tend t use the strategies, for example, a portfolio or an investment diversification. This is done so that the risk could be mitigated or managed in an effective manner.

Now with the risk management is done in an inadequate way, it can then result in severe consequences which may affect the organization or a business or an individual or the economy.

Examples of risks management📌

Suppose there is an individual named ‘John’. And it has been 5 years now since he first started his company and now it has grown substantially and the asset has $40,000. Now along with that, John also considers investing in stocks from Apple but insurance of the amount that he should invest.
On top of it all, the prices of the stock is also high thus in the short term, any potential dividends would be extremely limited. Therefore he decides to go for a risk analysis so that he can make the best investment decision according to his situation.

After the risk assessment, it was revealed that investing in the stocks of Apple would be very risky for those who are new in the investing world in the present scenario. And in addition to it, the prices of the stock is also quite high thus making it extremely limited for any potential dividends in the short term. In this way, she will be needing to devote a part of her remaining savings so that she could perceive adequate dividends.

Thus because of so many reasons, he finally comes to a conclusion that it would be unwise of him to make an investment. And then he decides to invest in some new equipment that is related to the business and focus on increasing sales.

What are the various standards of risk management?📌

Now since the early 2000s, there have been many government organizations and industries that have been coming up with regulatory compliance rules that used to come with various plans associated with risk management. It would include the manner in which the plans could be executed, the various policies associated with it and the producers of implementing those plans.

In many of the big organization and businesses, there is the board of directors who are assigned this job of reviewing and the reporting of the accuracy of the enterprise risk management process. And over time these have become major aspects of the strategy to make a business successful.

Now there are several organizations like the ‘National Institute of Standards and Technology’ and the ISO as well.
The main purpose of these organizations is to identify any kind of threats, analyze unique vulnerability so that the risks could be determined and then find out the ways in which those risks could be reduced or completely eliminated.

Once all of the above processes are done, the risk reduction efforts can be implemented according to the strategy specified by the organizations.
For instance, the ISO 31000 principles, is known to provide a framework for the risks management process which the companies use irrespective of the size of the company or the target sector.

In this way the main objective of the ISO 31000 is to “enhance the livelihood of achieving their goals, improving their abilities to identify both the opportunities and the threats, being able to effectively allocate and make use of the resources that are available there of the risk management’.

Now here one thinks to note is that this ISO 31000 can’t be used for the purpose of certification although it does provide the guidance for both the external as well as the internal risk audits. And in addition to that, it also allows the companies to make a comparison between their practices of risks management to thus of the benchmarks that are recognized at international levels.

What is the importance of risk management?📌

The risk management is important for all kinds of organizations be it a profit organization or a nonprofit organization. This is because the risks are unexpected events that can cause a lot of damage to the organizations is it is not shielding properly prior to the time. There can be various operational risks which have to be managed.

Now, these risks can be in several forms like loss of funds, injury to staff, natural disasters or anything else could have a serious impact on your business. Thus this is where the risks management comes handy.
The risks management is important because, in such an unforeseen situation, it protects your organization or your business. Risk management helps to prepare for all of those unexpected events in advance.

This way it minimizes the risk and also cuts down the extra cost or financial burden that you would have to bear unless otherwise. If the risks management is carried out in a proper manner, it will help a lot in saving up your money and also in protecting the future of your organizations.
Risks management helps you in identifying all sorts of risk that are possibly evaluating different aspects. This by after carrying out the risk, the owner of the business or the organization can design or plan a certain procedure that will be following in order to avoid the risk or minimize the impact of it to a greater extent or at least be able to cope up with the impact of it.

Thus it is various essential to the risk management base it will help these entities to understand the actual level of risks, evaluate it and then come up with a plan that will help them lessen the impact of it or in some cases completely eradicate it.

What are the advantages of risk management?📌

There are various advantages of risk management.
Some of these are mentioned below:

1. It helps a lot in saving up the resources, incomes, time, assets, property; people act because with a properly carried risk management only fewer claims occur.
2. It helps in creating a safe and secure environment for the staffs, the customers and the visitors.
3. It also reduces the legal liabilities thus increases the stability of the operation which is being performed.

Conclusion📌

Thus risk management is very essential for any entity to be a profit organization or a nonprofit organization. The owner of such entities must make sure that effective risk management is carried out to avoid future damages.
Source: https://www.marketing91.com

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Inedit Facts

Today it’s difficult to imagine how a project would be managed without a chart or diagram that projects the tasks that must be done in order to achieve the project’s objectives.

One of the most common tools used in Project Management is the Gantt chart, which is a list of deliverables on one axis against time on the other axis.

This chart was invented by the American Henry L. Gantt in the 1910 - 1915 who was a manager and a mechanical engineer at a US factory. Other sources claim that Karol Adamiecki, a polish engineer developed this chart in 1896, but he didn’t publish it till 1931 and then only in polish, which made it very limited since the polish isn’t an international language.

The Gantt charts were popular since their first version, and have been used by the US Government during the World War I and Soviet Union in 1929 for the First Five Year Plan, thanks to its flexibility and the Gantt chart bars capacity to be adjusted as needed.

In 1980s, the personal computers started to made complex Gantt charts and by 2012, almost all of them were made by software.

In 1999, this tool was labelled as “one of the most widely used management tools for project scheduling and control” by Robert Klein, an IBM Manager in his book “Scheduling of Resource-Constrained Projects”.

The number one tip when starting a business!

Love you what you are doing and you will never have to work!

Do not start a business simply from the assumption that it can bring huge benefits. Do what you love.

A business built on your strengths and talents has a greater chance of success.

It is important not only to create a profitable business, but also to enjoy it in order to contribute to its growth and prosperity every day. If you don't, your project is doomed to fail.

This is perfectly reflected in the book of Zig Ziglar “Better than good”, where he argues that –a successful business is born from passions, not from the need for money!

We keep pace with technology and educational trends necessary for the professionals and companies in order to enhance the knowledge, skills and finally competitive advantage due to well selected life-long learning needed courses.

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ProfiVectrum tends to develop innovative potential of open-minded and creative persons who are not afraid to take risks and change their lives for the better.

Meet Elena, who is coordinator to various Erasmus+ projects and has more than 7 years experience in design and project implementation.

Most of her projects are focused on entrepreneurship, open innovations and promotion of the European Union values in the various domains of academic and civil society environments.

As part of our top-level team, Elena both makes strategies and coordinates projects that help to create an environment where entrepreneurship, innovation and management skills meet each other.

Elena will offer valuable information for a high-class content and design (tips, advice, interviews and more) which will help all of you to succeed together - like a team.

With robust educational degrees in Law and Project Management and a great professional record in various public and non-governmental institutions, she got the opportunity to advance in her career and now to share the lessons she learned with all of you!

You can find out more about Elena on: www.ngo-impuls.com

With more than 10 years of experience with projects, Samvel managed to work in retail banking and at the European Investment Bank in Luxembourg, he has been a consultant for the World Bank, where applied in practice all his knowledge and abilities on project management.

Therefore, he has a multidimensional background as a financial analyst, consultant and project manager in various IT Companies, Public and International organizations, his past experiences are only amplified by current involvement in various national and international projects which support entrepreneurship.

It should be noted that he is used to work with young companies as well as incorporated ones by managing the process from the initiation of the products to the market launch and delivering the process to the customers.

You can find more about Saamvel on: www.ngo-impuls.com

With 10 years of experience on career guidance and management, Annie acts as a career adviser/counsellor and PhD researcher at Brusov State University in Armenia, chair on Education Planning and Management.

Also she is project manager at Graduates Association of Yerevan Brusov State University of Languages and Social Sciences NGO where she manages local and international projects and works in cooperation with the institutional partners.

Currently she is delivering since 2007 the course “Career Management” and “Managerial Competences” for the Master of Arts students.
Annie has a great experience in managing different mobility projects, educational programs, international and national projects and also events, like Yerevan Perspectives Intern

He is Robert.

11 years of teaching and professional experience, characterising Mr. Khachatryan as a good and open-minded lecturer, research manager and education administrator working for the Higher universities from the United States, Armenia, and international organizations such as the World Bank.

Currently Mr. Khachatryan is actively involved in the design of the project proposals and implementation of five projects co-financed by European Commission and other international donors.



ERASMUS+ SMART – Full Project Name: Fostering University-Enterprise Cooperation and Entrepreneurship of Students via SMART Cafes. Project Number 585620-EPP-1- 2017-1-ELEPPKA2-CBHE-JP https://www.smartcaffe.eu/
ERASMUS + MINERVA – Full Project Name: Strengthening Research Management and Open Science Capacities of HEIs in Moldova and Armenia. Project Number 597912-EPP-1-2018-1-MD-EPPKA2-CBHE-SP https://erasmusplus.am/course/strengthening-research-management-and-open-science-capacities-of-heis-in-moldova-and-armenia-minerva/
ERASMUS+ LNSS – Full Project Name: Library Network Support Services: Modernizing Libraries in Armenia, Moldova and Belarus through Library Staff Development and Reforming Libraries. Project Number 561633-EPP- 1-2015-1- AMEPPKA2- CBHE-JP https://lnss-projects.eu/amb /

ERASMUS+ EUAGRO – Full Project Name: Fostering European Integration of the Republic of Moldova with the specific accent on the agriculture sector. Project Number 610667-EPP-1-20191-MD-EPPJMO-PROJECT https://euagro-project.eu/
ERASMUS+ EUSHARE – Full Project Name: European economic integration of the Republic of Moldova through EU shared values: education-research-innovation. Coordinator of the project. Project Number 610666-EPP-1-20191-MD-EPPJMO-PROJECT https://eushare-project.eu/

Entrepreneurship, management and marketing are his strengths. By the way, he is one of the promoters and initiators of an international network of Start-Up Hubs called SMART Cafe, also co-funded by European Commission.

Mr. Khachatryan is also engaged at Yerevan Brusov State University of Languages and Social Sciences in the capacity of the Head of the Centre for Quality Assurance and Reforms, as well as Head of the Chair on Education Management and Planning.
He has more than 50 publications about entrepreneurship and management topic, most recent work being published in 2020 called „Managerial Competences”.

You can find out more about Robert on: www.ngo-impuls.com

ProfiVectrum tends to develop the innovative potential of open-minded and creative persons who are not afraid to take risks and change their lives for the better.

We keep pace with technology and educational trends necessary for the professions and companies in order to enhance the knowledge, skills and finally competitive advantage due to well selected life-long learning needed courses.


ProfiVectrum contributed to the development of already hundreds of talented people within their way of transformation and expansion of the experience.

Priorities for ProfiVectrum are:

- Improvement of the entrepreneurial skills of youth, academic environment and research institutes;

- Increase of the project management capacities, risk management, strategic management skill, time management, cost management, quality management, human resources management, communication management, procurement management, and stakeholder management;

- Enhancement of the grant writing and implementation abilities.

We have already impressive results in the domains of our interest:

- Innovation

- Entrepreneurship

- Management

- Education and others.

This is confirmed by our strong involvement in the enhancement of the innovational ecosystem in Belarus, Moldova and Armenia thanks to smart methods applied in practice by our multinational team within the Network of SMART Cafes (www.smartcaffe.eu