Abstract
This study is an investigation on effective risk management with respect to organizations in Nigeria. The objective of the paper is to examine factors militating against effective risk management in organizations. The paper adopted content analysis of library materials, journal publications, internet materials and other documented materials relevant to the subject matter. It was concluded that effective risk management is a proactive approach towards mitigating the impact of threats, maximizing opportunities and optimizing the achievement of objectives. It was recommended that managers of organizations in Nigeria should imbibe and articulate good corporate risk attitude, strong risk culture and clearer risk appetite.
Highlights
Cultural theorists such as Mary Douglas Aaron Wildavsky and John Adams have shown that risk means different things in different settings and organizations(Douglas and Wildavsky 1983;Adams 1995).Risk has no universal definition; variability of outcomes is a common way of expressing risk(Skipper 1997).Risk has two parts: uncertainty and consequence
Systematic risk refers to the risk inherent in the entire system or entire market. It is sometimes called market risk, systematic risk or undiversified risk. This is a type of risk that cannot be avoided through diversification whereas unsystematic risk is risk associated with individual assets and can be avoided through diversification
Effective risk management is a proactive approach towards mitigating the impact of threats, maximizing opportunities, optimizing achievement of objectives .It does not eliminate risk completely but reduces its impact on organizations
Summary
Cultural theorists such as Mary Douglas Aaron Wildavsky and John Adams have shown that risk means different things in different settings and organizations(Douglas and Wildavsky 1983;Adams 1995).Risk has no universal definition; variability of outcomes is a common way of expressing risk(Skipper 1997).Risk has two parts: uncertainty and consequence. Risk management is an invaluable tool for managing uncertainty associated with business organizations that have always practice some forms of risk management implicitly and explicitly (Meulbroek 2002).It is not a new concept because risk management techniques such as risk reduction, through safety, quality control and hazard education etc have been in existence for a long time (Doherty 2000).risk management is not a process of avoiding risks. It does not eliminate risks but manages risks associated with operations in organizations thereby maximizing opportunities and minimizing threats. Organizational threats cannot be completely eliminated; the best managed business may still experience losses due to unaccounted threats (Kimball 2000; Stulz 2008; Hubbard 2009; Jorion 2009)
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