Risk Management

Risk is referred to as the probability of a given event or occurrence and its consequences. In this case, risk management is the exercise of using tools and appropriate methods to manage these risks. Jus like JAA Inc., businesses face many risks, and thus it is crucial that risk management be made central for business strategic management actions.

Q1.  Other types of general or specific policies that can manage risks

Risk management is essential in all businesses. For a company to survive, it has to have effective strategies through the following policies.

Monitoring operational processes of employees.

In carrying out their daily tasks in the company or even outside, employees encounter risks that possibly arise from unethical, unauthorized and illegal actions. These can ruin the image of the company if not prevented or managed. In this case, the company has a role of correcting such mistakes by guiding the people towards set norms and principles. This is best explained in the rules-based compliance approach where there are a set of rules that govern the employees within the organization. In case there is straying from this, there are set of repercussions the employee is subjected to.

Risk management system

Risk management system can be designed by any company which has taken a risk and wants to strategize on acquiring potential gains. The system will have to minimize the probability that the risks assumed by the company can effectively materialize or rather improve the ability of the company to contain risky events in case they occurred.

Training of employees and making of follow-ups

In most cases, risks tend to occur due to the inadequacy of knowledge. Employees may have little or no knowledge about a certain task, and as a result, handle the task negatively creating a risk for the company as a whole. In such cases, it is upon the management to hold annual training for all employees where they are taught how to handle tasks effectively. After the training, a follow up must be made to ensure efficiency.

Q.2 Importance of “tone at the top” and a strong risk culture critical components for a company’s success

Tone at the top is the ethical atmosphere that is mostly developed by the leadership of any given organization to manage employees in the workplace. In other words whatever one the management chooses or decides on will have to be followed by the employees within the organization. For instance, if the tone set by the leader upholds integrity as well as ethics, then the employees will have to enforce these values without questioning. In other words, what the leaders do determines the employees’ actions too. This is effective for the company since its success lays on the hands of the management. Setting an ethical tone of the way employees have to carry themselves around yields profit for the company. This is so since they will be forced to do whatever it takes for the organizational goals to be achieved regardless of the process.

Just like tone at the top, having a strong risk culture is effective in acquiring success for any given company. A risk culture is vital in meeting regulatory expectations as well as improving financial performance for an organization. With the changes arising from technology, the national, as well as international regulators, have emphasized more on organizations’ ability to design an effective risk management culture. This is so given the fact that markets and even rating agencies have realized the value strong risk cultures have on a company.


Risk management is evident to go beyond a one-off exercise. It requires continuous monitoring as well as reviewing the success of the risk management strategy. By monitoring, it is easy to identify risk as well as correcting it through appropriate measures. Arguably, monitoring risks gives an opportunity for the company to learn from experiences hence come up with a suitable risk management approach.


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