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Advantages of Risk Management Plan
A risk management plan is a paper the highlights risks that could occur and gives ways of addressing the risks when they occur. The risk management plan should be checked regularly so as to ensure that new risks are captured in the document. A risk management plan involves various steps. The first step is to identify the potential risk and then analyze the effect of the risk on the organization and evaluate the risk . Acting on the risk is the fourth step and the last one is to examine and appraise the risk. Components of risk management include knowing the nature of the risk, developing assumptions, coming up with a structure break down, assessing the risk probability, knowing the cost impact and scheduling and writing the risk plan in order of importance. This paper will discuss importance of a risk management plan for companies.
The risk management plan assists organizations identify risks that might not be easily seen. A thorough investigation is carried out by a risk management team. This ensures that they identify all the risks facing an organization. The organization is able to save costs because it is able to deal with all the risks facing it.
The risk management plans are used to build the best defense against possible lawsuits. The organization may fail to possible lawsuits that face the organisations all the time from various sources. An organization is able to save money and build a good reputation since it has a risk management plan that protects it from unforeseen lawsuits.
A risk management plan helps in recognizing and controlling work hazards. The organization is able to identify hazards at the workplace when coming up with a risk management plan. Control measures on how to deal with the hazards before they occur are laid down on the plan. The organization is able to avoid accidents at the workplace and maintain a safe working environment.
The organization is able to create awareness of the risks through an analysis in the risk management plan. This plan ensures that all employees are aware of the risks that could affect them in the course of them doing their job. Employees are also trained on how to avoid risks by using the risk management plan. This guarantees that the employees know how to protect themselves from the risks.
A risk management plan will set out the acceptable standard of managing the risks as per that law requirement. The organization is assisted in ensuring that the law is followed so as to avoid being taken to court. Failure to follow the law requirement could lead to organization closure which is not good for business.

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