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Risk Measurement

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RISK MEASUREMENT 1
Risk measurement
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RISK MEASUREMENT 2
Every investor assesses the market to know the likely enterprise that can bring in a good
outcome. Some investors who will have wanted to put their money in a given business will opt
for other investments to avoid the risks associated with the loss of money. Just like other
businesses, a manufacturing business has to cater for its risks in order to be able to handle these
risks in case they occur. Risk management involves identifying the risks, carefully assessing and
analyzing them and taking an action towards those risks. For a manufacturing company, the three
main ways to measure risks include an estimation of the consequences/ impact of the risk, getting
an estimation of the level of the threat and an estimation of the level of vulnerabilities listed in
the description of the risk(Garman, & Forgue,2014).
The impact of a risk is the damage to an asset for the when the risk occurs, in this case it
is the effect of the risk on the assets of the manufacturing business. The risk is bigger when the
effect to the assets belonging to the business is bigger and vice versa. Since the description of the
risk includes a description of the asset element in question and the type of damage it suffers, the
task at hand is to evaluate the seriousness of this damage.
The level of threat is evaluated and can also be used to assess the risks facing a
company’s investment. The level of threat includes different parameters such as the probability
that an event will occur and consequently the destructive potential of the threat and the entity's
exposure to this type of threat, in terms the ease of occurrence of the threat. A function
combining the probability of occurrence with the entity's exposure to this type of threat seems
the closest thing to the idea of probability. The probability of a risk to a manufacturing company
would therefore be the probability of occurrence and the business’s exposure to that particular
threat (Reilly & Brown, 2012).

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RISK MEASUREMENT 1 Risk measurement Student’s name University affiliation RISK MEASUREMENT 2 Every investor assesses the market to know the likely enterprise that can bring in a good outcome. Some investors who will have wanted to put their money in a given business will opt for other investments to avoid the risks associated with the loss of money. Just like other businesses, a manufacturing business has to cater for its risks in order to be able to handle these risks in case they occur. Risk management involves identifying the risks, carefully assessing and analyzing them and taking an action towards those risks. For a manufacturing company, the three main ways to measure risks include an estimation of the consequences/ impact of the risk, getting an estimation of the level of the threat and an estimation of the level of vulnerabilities listed in the description of the risk(Garman, & Forgue,2014). The impact of a risk is the damage to an asset for the when the risk occurs, in this case it is the effect of the risk on the assets of the manufacturing business. The risk is bigger when the effect to the assets belonging to the business is bigger and vice versa. Since the description of the risk includes a description of the asset element in question and the type of damage it suffers, the task at hand is to evaluate the seriousness of this damage. The level of threat is evaluated and can also be used to assess the risks facing a company’s investment. The level of threa ...
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