What are the advantages and disadvantages of environmental risk management? Advantages: 1. Better strategy of company. Through the environmental risk management, we are going to have a better understanding on the environment, which may make have a better decision making on company strategy. Usually, if we know a place which may suffer from earthquake or tsunami frequently, we may not build or open some department on that place in order to reduce risk. If we have better understand or information for environmental risk, we can avoid some risk by locating the facilities at best place.
So, risk is reduced and better business plan can be run as we have better information. 2. Reduce the money and life loss bring by environmental risk as better preparation can be made Environmental risk management is a process which identify risk. If the financial risk management is done by government, the government then can provide better risk treatment for public. For example, the government can build water defenses in order to avoid or reduce the damage for tsunami.
In Japan, there are usually some water defenses for the coastal city. As the environmental risk management identify risk and possible solution , it makes overspent bring out a more effective risk treatment for public. Through those water defenses, anti-earthquake house, or more warning system, the loss of environmental risk is reduced as people can better prepare for it. 3. Increase the rate of recovery after suffering the environmental risk.
The risk management process also give us information about the expected loss of a risk. For example, we may know the percentage of building destroyed in a city which suffer big disaster. Through the calculation, we are able to know how much resources is needed for rebuild, or which type of source is needed for the recovery. It is possible for us to estimate that through the historical data. Moreover, by environmental risk management, we can have a risk- reaction plan before the risk occurs.
What Are The Disadvantage Of
Assortment can better know what they should do if the risk occurs. For example, government can know how to find the required material for rebuild, as well as how much human resources is needed. Those estimations can make the recovery plan run smoothly which increase the efficiency of it. Disadvantages: 1. Slower business process, which make company lost business opportunity With the environmental risk management process, more information and data needed to be considered before a project or policy come out, which can be time costly.
For example, we may need to search for the historical data of neutral disaster of a place for 50 years, and compute the expected loss due to the risk, it can really need a long time. As company want to practice a better environment risk , they have to trade the project effectiveness off, which mean the business process is slowed. This can reduce the business opportunity of risk taker, as they are more Willing to take risk, but now the sis- management process highly slow their decision making process and the chance may lost before they can carry the plan out. 2. Limitations occurs: untreatable and unexpected environmental risk exist The environment change every day ,which mean it is hard for us to be quantified and well-measured those risk by historical data.
And, some environmental risks are too powerful for us to overcome. It is not surprise that even we do all the risk calculation, the risk still occurs unexpectedly. In the case of Henchman earthquake there are some small earthquake happened before the biggest come. Most of the geographers thought that it was just a normal tectonic movement, like all the historical before, and no big earthquake will happen. However, the fact shows us that those geographers were wrong and a massive earthquake happened.
With the same case, we can know the limitation of environmental risk management. Even we understand the “earthquake” is going to happen, , we are not able to stop the risk , what we can do is to leave the place and try to survive. The risk management has its own limitation. 3. Increase company cost in risk management due to skilled staff employment ND equipment purchasing.
Cost is needed to practice the environmental risk management. Practicing business risk management involves different cost like time cost of manager ,money cost on skilled staff employment and equipment purchasing. The high cost of risk management can highly reduce the profit of a business. It is a common problem of any risk management , however, it is more serious when it comes to environmental risk management. Extremely high-technology equipment is needed for better estimating a neutral disaster.
For example, Joint Typhoon Warning Center(JUST) in SACS, using the highest technology bevel to monitor any possible disaster, and it used over billions of dollars to develop as the equipment is really high-tech. It is very costly for company or government to buy or invest the equipment needed for monitoring the environment risk. What are the difficulties and challenges on implementing environment risk management in a company and society? 1. Staff may not have enough knowledge on risk management A group of well trained professional people are needed to implement risk management cause environmental risk management is a complicated process, required calculation, analyzing , brain storming, etc. In some country, it is not easy to find professional risk manager.
Like some developing country, China , there are only a few hundred qualified risk managers per year which cannot fulfill the demand . Not only risk manager is needed , but also the environmental professor is needed for the risk management. Even we are able to employ professional staff. However, the others staff may not have enough knowledge to carry out the risk management plan made by the risk management development, which highly limited the effect Of the environmental risk management and it is a big challenge. 2.
Risk cannot be quantified and well-measured as historical data and technology limited It can be hard for us to search useful or required information to make the environmental risk management more accurate. It is impossible for a company or even government to find all potential risk in environment. For example , even we compare all the data in history , we may not know the when will a tsunami happen. It is because the current human technology is not able to find all the information out, or compute all the future environmental event through the historical data. In the same way, it can be to accurate for us to measure the expected loss due to environmental risk as the result of risk is not the same every time, ( or can be totally different as the situation of environment changed over time).
It is also a big challenge for us that the risk cannot be quantified and well-measured . 3. Difficulty on cooperation between departments. Cooperation between departments is needed for risk management. Risk treatment is involved in risk management.
When we treat a risk , it is usually a cross department process. For example, if we need to switch a working place in response to a happened environment risk, we need the accounting apartment to calculate how much spending we need to use , we need to submit the environmental risk estimation project for manager, we need different department to communicate and cooperation. If the massages of some department are misunderstand by other department, the risk treatment may be failure and highly harm the company or. Hence, there are challenges on cooperation between departments if environmental risk management is implemented. 4.
Long time and investment on risk management process Usually, it is need long time and it is costly for us to treat or estimate environmental risk. Take Japan as an example, they develop a “Tsunami warning system”, JAWS, which is used more than 10 years to develop. For each year, Japan government pay million to update and sustain the system. For risk treatment, Japan government is keep try to invest on faculties or technology which is developed for reducing the damage for Tsunami, or earthquake, which is also need long time to implement. Like the anti- earthquake house in Japanese, it also cost 14 years to invest.
Therefore, long time is needed to estimate environmental risk and long- run investment is needed for treating the risk. It is an obvious difficulty.