Risk is normally perceived as something to be avoided because of its association with threats. While this is generally true, the risk is also to be associated with opportunity.
Failure to take opportunities can be a risk in itself. The opportunity costs of underserved market spaces and unfulfilled demand is a risk to be avoided. The Service Portfolio can be mapped to an underlying portfolio of risks that are to be managed. When service management is effective, services in the
Catalogue and Pipeline represent opportunities to create value for customers and capture value for stakeholders.
Otherwise, those services can be threats from the possibility of failure associated with the demand patterns they attract, the commitments they require and the costs they generate. Implementing strategies often requires changes to the Service Portfolio, which means managing associated risks.
Decisions about risk need to be balanced so that the potential benefits are worth more to the organization than it costs to address the risk.
For example, innovation is inherently risky but could achieve major benefits in improving services. The ability of the organization to limit its exposure to risk will also be of relevance. The aim should be to make an accurate assessment of the risks in a given situation, and analyze the potential benefits. The risks and opportunities presented by each course of action should be defined in order to identify appropriate responses.
Risk is defined as uncertainty of outcome, whether positive opportunity or negative threat. Managing risks requires the identification and control of the exposure to risk, which may have an impact on the achievement of an organization’s business objectives.
Every organization manages its risk, but not always in a way that is visible, repeatable and consistently applied to support decision making. The task of management of risk is to ensure that the organization makes cost-effective use of a risk framework that has a series of well-defined steps. The aim is to support better decision making through a good understanding of risks and their likely impact.
There are
two distinct phases: risk analysis and risk management. Risk analysis is
concerned with gathering information about exposure to risk so that the
organization can make appropriate decisions and manage risk appropriately.
Types of Risks are:
Service Provider Risks
• Contract Risks
• Design Risks
• Operational Risks
• Market Risks
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