Payables are recorded when a debt is incurred but payment has not yet been made, for example, when a charity receives an electricity bill but has not paid it yet, the bookkeeper records it as a payable for the reporting period.Risk Assessment and Monitoring
7/5/201722Risk assessment and contingency planning is the process of determining the risks a business faces and what it must do if those risks are realized. While it may not be possible to plan for every possible emergency, most businesses can identify those they are most likely to face and those that will cost them the most if they come to pass.Every business needs a risk management plan, whether it is as simple as purchasing liability insurance or so complex as to require full-time risk managers to execute it.Risk Assessment and ContingencyRisk Forecating : Identify the threats that a business faces whether they are human, operational, financial, environmental/weather-related, political, procedural, technical or project-based. Measure each of these threats based on how likely they are to occur and how much damage they could do to the business. There are several techniques for identifying risks including group brainstorming, interviews, surveys, root cause analysis, review of past accident reports, SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis and diagramming. Measure Risk : Each identified risk can be rated on a scale of one to five, with one being the least likely to occur and causing the least damage and five being the most likely to occur and causing the most damage. All risks can then be sorted into low, medium or high depending on the rating. Risk Option Evaluation : Once identified, a business can decide what it will do with the risk it faces. The four basic approaches to risk are risk avoidance, risk reduction, risk sharing or transfer, and risk retention. Risk avoidance involves not doing the project or task that will bring the business into contact with the risk. -------- contd.Strategies and Steps to Minimise Risk……. contd. Risk reduction means putting procedures into place that will make the risk less likely to occur or mitigate the effects if it does occur. Risk sharing or transfer typically involves buying insurance to cover losses or outsourcing the task so that someone else bears the burden of risk. Risk retention is the process of accepting the possibility of loss and budgeting to cover the risk.Contingency Plan Creation: If a business decides to mitigate or accept the risk, it will benefit from having a contingency plan in place to deal with the situation should it occur. This can range from a fire evacuation plan to appointing an emergency coordinator to help with evacuations or media contacts. Risk managers can create detailed plans to deal with the most likely situations the organization will face or those that will do the most harm.