Management of Risks and Implication on the Nigerian Manufacturing Sector

Abstract

The study seeks to identify the sources of risks in the manufacturing organizations,  identify the risks that should be retained, ascertain how to assess and prioritize risks, and ascertain the implication of managing risks.

The study was carried out primarily through the survey method and interview of employees in five manufacturing organizations in Nigeria.

Secondary data were obtained through books, journals, and internet. Findings indicate that the sources of risks in the manufacturing organizations include employees, suppliers, customers and competitors; small risks, risks that are large, and all risks that are not avoided or transferred are retained; risks are assessed and prioritized by determining the severity of loss, and probability of occurrence; Improperly assessed and prioritized risks result in waste of time dealing with risks that are not likely to occur.

Risk management is simply a practice of systematically selecting cost effective approaches for minimizing the effect of threat realization to the organisation. All risks can never be fully avoided or mitigated simply because of financial and practical limitations. Therefore all organizations have to accept some level of residual risks. However, if risks are improperly assessed and prioritized, time can be wasted in dealing with risk of losses that are not likely to occur. Spending too much time assessing and managing unlikely risks can divert resources that could be used more profitably. Unlikely events do occur but if the risks are unlikely enough to occur it may be better to simply retain the risk and deal with the result if the loss does in fact occur.

Keywords: Risk Identification, Risk Assessment, Risk Charting, Risk Checking, and Risk Management