Question
After a company identifies potential risks, it must measure those risks. Epstein and Buhovac (2014, p. 185) identified a seven-stage process for measuring those risks.
After a company identifies potential risks, it must measure those risks. Epstein and Buhovac (2014, p. 185) identified a seven-stage process for measuring those risks.
- Calculate the benefit associated with each issue that may generate risk.
- Calculate the potential costs for each and include reputation risks.
- Estimate the probability that the risks will happen.
- Multiply the potential cost by its probability to determine the expected value of each risk.
- Estimate when the risk may happen and calculate NPV.
- Add the NPVs of all risks and add as a line item in ROI.
- Calculate expected value of ROI.
Consider a Saudi business and the risks it faces. Describe these and then address how the company might estimate the probability the risk will happen.
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Management Process
Authors: Lee Long
4th Edition
978-0201822939,0201822938
