Concept of Risk Magnitude & Severe Consequences
Concept of Risk Magnitude & Severe Consequences
I have to post of my classmates disscauion about a topic and I need someone ton respond to each one in academic way
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Risk magnitude can mean the size of the adverse outcomes the risk has caused. According to Hopkin (2017) risk magnitude refers to the severity of the risk. A significant reduction of risk magnitude needs an effective reduction of the risk impact and its consequences. However, risk mitigation can help to decrease the risk magnitude. Some risks, such as natural disasters, cannot be prevented and can result in huge loss of people and property. But, the disaster impact can be decreased. Mitigation means reducing the short and long terms impact of risks (FEMA, n.d). Moreover, Mitigation activities promote public safety.
To reduce risk magnitude, the organization must have a solid risk mitigation plan. The mitigation plan should be taken to decrease the negative impacts regardless of the risk’s size. For instance, the corporate will install a fire extinguishing system throughout the building to put out any size of fires. Additionally, when planning for mitigation, the corporate should ensure that the risk magnitude doesn’t impact the FIRM; finance, infrastructure, reputation, and marketplace. Decreasing risk magnitude is essential to save the corporate key dependencies such as its reputation.
The large size of the damage can give a negative reputation to any organization. Therefore, mitigating risks and decreasing the risk magnitude is essential to save any business in terms of reputation and marketplace. Hopkin (2017) describes that as a damage limitation. For instance, during high scale risks, the organization should deal with media smartly to reassure the community that the organization has handled the risk professionally. Otherwise, the community will not trust the organization in the future which could lead to lose of customers and partners. Finally, mitigating risks will reduce the risk magnitude and prevent permanent damage to the organizations’ key dependencies.
Hopkin, P. (2017). Fundamentals of risk management: Understanding, evaluating, and
implementing effective risk management (4th ed.). New York, NY: Kogan Page Publishers.
Federal Emergency Management Agency. (n.d). Hazard mitigation assistance grants. Retrieved
from https://www.fema.gov/grants/mitigation
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Risk magnitude refers to the intrinsic severity of the risk in case it occurs. Reducing the severity of hazard risk can be achieved by reducing both the consequences and impact when they materialize (Hopkin, 2017). In reducing the severity of the risk, a firm is required to reduce the impact of risk in finances, reputation, infrastructure, and market place. Reducing the impact of the risk is concentrated on the damage limitation at the time of risk and the cost of containing the hazardous event after it has occurred. Therefore, loss control is concerned with mitigating the impact, magnitude, and consequences of a harmful event. The limitation of damage is also an essential feature of reputational management of risk (Hopkin, 2017). When a hazardous event takes place in a company, the leaders will try as much as they can to protect the company’s reputation by assuring the stakeholders that the organization appropriately responded to the event. Cost containment is also a significant concern for the organization. The cost containment after a hazardous event is related to the business continuity plan or the recovery plan for a disaster, which the organization was able to put in place before the occurrence of the incident. This can put the business in the best possible position in ensuring that the incident’s overall cost is kept as low as possible. In this way, the determination of the magnitude of risk helps in controlling losses.
References
Hopkin, P. (2017). Fundamentals of risk management: Understanding, evaluating, and implementing effective risk management. London, NY, NY: Kogan Page.
