Methods of risk identification

Abstract

The paper mentions a wide range of methods used in risk identification. It goes on to try to encourage the greater use of systematic identification of risks, in proper perspective, by outlining some appropriate techniques.Risks in a group of companies, for example, are better appreciated and more likely to be effectively controlled by classifying key risk information such as hazards, assets and earnings; and by preparing procedural technical and financial guidelines.Particularly important concepts include the setting of risk acceptance levels, the assessment of risk, loss estimation before the event, analysis of past losses, and the effective monitoring of risk against predetermined standards.Graphical and tabular presentation of information can be very useful in risk identification and in the evaluation of the identified risks. Examples of such presentation shown in the paper are bar-chart profiles for assets and earnings, tables for risk classification by points methods, loss profile graphs and a nomograph to set security levels with a view to minimising fire loss from malicious causes.It should be appreciated that ill-informed use of the techniques described could lead to misleading conclusions and initially better results will be obtained by working with those skilled in the art.