Risk in an Organisation

Risk is an important part of our life. If we don't face risk and avoid it, we will get no victory and achievement and we cannot improve our self and there will be no progress in our life. In the same way, we humans work in big businesses and companies where we are responsible for lot of things in the company. So, company will be in trouble if any mistake or fault happen from our side (The Institute of Risk Management , 2014). Many organizations of all types and sizes get a lot of different risks that can affect the success of their objectives. These objectives are different organization's activities, like strategic initiatives, operations, processes and projects, and also reflected in the strategic, operational, and financial. All activities of an organization have risks. Risk management helps decision making by have the knowledge of uncertainty and its effect on success objectives. If any risks affect organizations, it can have effect on the economic performance and also on their respect of professional reputation, as well as environmental and safety. So, managing risk successfully help companies to perform well in the circle of so many risks and problems (Third Sector, 2010).

Risk management is a systematic process to understand, evaluate and address the risks because to maximize the chances of objectives being achieved and ensuring organizations, individuals and communities are good to work. To get an effective risk management program and advantages of it, we should understand the risks, then make priority from high to low level and in the end, good approach to monitor and control them (Rittenberg & Martens, 2012).

There a lot of factors that is responsible for risks to a company or an organization. Mainly, the organizational risks are divided into two types which depend on the place it comes from. They are internal risks and external risks.

The Internal Risks are that risks that happen in the company itself means from inside the business. These type of risks are happening in the normal routine of the business. Because these risks happen inside the business, the risks are most likely can be calculated and we can maybe know when they are going to happen and how and all the information about the risk can be determined. Therefore, the managers and other high level authority persons can have a control and save their business from these risks to certain extent. The different internal factors that become responsible for such risks are:

1. Human Factors

Human factors are one of the important causes of internal risks in company. Humans are not perfect, they make mistakes and this will have an effect on the company. People in an organization are sometimes careless and do not pay attention to their job from which they will make mistakes in their work. Also, some people are dishonest and they steal things and make fraud with the company. In fact, 80% of the thefts and robberies in a store are done by the staff and the store members (Donaldson, 2009). Sometimes, the workers may do strikes and lock-outs which can result in the shutdown of the work. Also, the managers and other high level important people in the company can make bad decisions that will badly affect the company. As well as, suppliers often do not supply the materials or products on time. Or people take money as a loan and never return to the company (Lindblad, 2011).

2. Financial Risks

Financial risks are part of the financial structure of your business, business transactions, and the financial systems you use (Business Victoria, 2014). They can be penalties, fines and sanctions, loss of revenues, exchange rate losses, lawsuits for damages & injury claims, debt, fraudulent cases, purchasing practices, and many more such related risks. Also, Finances may be less to meet operational costs and expenses. (Finance & Facilities, University of Washington , 2014).

3. Technological Factors

The technological factors are the unexpected and new change in the techniques of production or distribution process. This factor will make the current technology look old and useless. For example, if there is some new technological advancement that will make the product with higher quality, then if our company is using the traditional old way and technique of production, then it might face the risk of losing the market because of the new technology that is able to create the higher quality product (Business Knowledge Resource Online, 2014).

4. Physical Factors

Physical factors are the factors which effect the physical property of the company like technological devices, chairs, tables, doors etc. For example, loss or damaging the property of the company. Also, most of the time it happens by the failure of machinery and equipment used in business or factory, also fire or theft in the company, damages happening while shipping or transporting the goods from one place to another, etc. We can also include the compensation money that a company pays when it does some accident or damage to other party as a physical factor risks (Heil, 2014).

Now, the second type of organizational risk is External risks. They are those risks which happen because of the events and activities taking place outside the business organization. Such events are usually not in the control of the company's manager or high level important person and therefore, the risks that the company would face cannot be calculated and neither have control or know about the risks going to happen (Epstein & Buhovac, 2006). The different types of external factors responsible for the organizational risks are:

1. Economic Factors

Economic factors are the most important reasons for external risks. They happen based on changes in the current market conditions. They may be in the form of changes in demand for the product, price fluctuations, changes in tastes and likings of customers and also changes in income. The conditions like recession, more competition for the product, inflation, unemployment as well as the up and down in world economy can badly affect your business.

2. Natural Factors

Natural factors are the unexpected natural disasters like earthquake, flood, shortage, cyclone, lightening, tornado, etc. The business manager or the company's head have a very little or no control. These type of events will take the lives of people or employees and also attack the property of the company like the building or even destroy the products and goods. In a news report it was said that the annual economic losses from natural disasters were $400 billion in 2011 (Brinded, 2013).

3. Compliance Factors

Compliance