Answer to Question #311689 in Finance for Comfort

Question

Discuss briefly two objectives of risk management [4marks]

Answer 1

Elimination and reduction of harmful threats

Risk management is used in identifying and analyzing risks associated with business. The risks are identified at early stages and the necessary steps are taken to prevent their harmful effects. Information from past events and experiences is analyzed and used in recognizing the uncertain future events that may be harmful to the business.

 

Enables efficient use of resources

Risk management helps in effective usage and utilization of resources. Fully utilized resources leads to higher profits because of high productivity. As a result of proper planning strategies, the management team is able to allocate the available resources appropriately and the organization goals are easily achieved.