Risk Magnitude in Risk Mitigation Organizational Threats
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Controlling and preventing loss is a critical goal of risk management. Hopkin discusses two terms – likelihood and magnitude – that relate to this goal. Select one of these terms and briefly describe how it may be taken into consideration when to successfully mitigate loss.
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Risk likelihood or probability in risk analysis is one of the deep-root elements that demonstrate the chance of risk to occur or impact any organization or business at a certain time. That risk can be determined, recognized, and measured so that facilitating the process of risk control. Risk likelihood can be determined on an inherent basis for any particular risk, or can be determined at the current level of risk, paying regard to the control measures that are in place (Hopkin, 2017). Thus, recognizing the causes of elevation in likelihood’s impact will undoubtedly enhance the prevention and risk control approach. For example, when car accidents’ frequencies are increased in any part of the world, the government must look out for the reasons for this peak in the accident number. One of the factors might be the speed limit is too high or at a dangerous level. Thence, the transportation department must minimize the speed limit in the highways and internal roads to control this factor, so the drivers stay at the safety limits, and car accidents will gradually diminish. Control the losses demands factors’ recognition, those leads to a rise in the likelihood of a loss. The losses control using likelihood recognition can be done by halting the factors or minimizing the impact. After the potential risks have been identified, the project team then evaluates each risk based on the probability that a risk event will occur and the potential loss associated with it. Not all risks are equal. Some risk events are more likely to happen than others, and the cost of a risk can vary greatly ( Adrienne, 2019).
Practically, the hazard risk likelihood decreasing aspect will enhance the approach of control and loss prevention. Understanding the nature of the risk and how it will impact and when is the key to acknowledging the hazard risk likelihood. Hopkin (2017) used an example of frequency car accidents for a particular motor company fleet in a specific time and linked that to controlling this hazard risk likelihood by implementing the monthly car maintenance.
Hopkin, P. (2017). Fundamentals of risk management: Understanding, evaluating and implementing effective risk management.
Watt, A. (2014). Project management [978-1-77420-013-1]. Retrieved from https://opentextbc.ca/projectmanagement/front-matter.