Risk management in Etablissement Kazoza et Compagnie-Rwanda

1.7 Definitions of terms

Business: A business (also known as enterprise or firm) is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, in which most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit or state-owned. A business owned by multiple individuals may be referred to as a company, although that term also has a more precise meaning.

Insurance: A promise of compensation for specific potential future losses in exchange for a periodic payment. Insurance is designed to protect the financial well-being of an individual, company or other entity in the case of unexpected loss.

Issue: concern that requires solution on the project.

Personal protective equipment (PPE): it is any apparel, accessories, apparatus, or substance which guards an individual from suffering injuries during mishaps. As such, equipments such as these are vital in industries working with heavy machinery, production, medical, and the like requiring the handling of dangerous substance and equipment. It can also refer to those protective attire and accessories used in sporting activities. The key reason for PPE is to reduce occupational hazards to ensure the safety of employees.

Risk analysis: Risk analysis is the process of defining and analyzing the dangers to individuals, businesses and government agencies posed by potential natural and human-caused adverse events or a process of assessing identified risks to estimate their impact and probability of occurrence (likelihood).

Risk control: The process through which decisions are reached and protective measures are implemented for reducing risks to, or maintaining risks within, specified levels.

Risk identification: The process of identifying risks using techniques such as brainstorming, checklists and failure history.

Risk Management (RM): the way through which an organisation identify and treat risk minimise loss. It is a logical and systematic method of identifying, analyzing, treating and monitoring the risks involved in any activity or process.

Risk Management Plan: is a document prepared by a business/manager to foresee risks, to estimate the effectiveness, and to create response plans to mitigate them.

Risk response: Appropriate steps taken or procedures implemented upon discovery of an unacceptably high degree of exposure to one or more risks. Also called risk treatment.

Risk: A risk is something that may happen and if it does, will have a positive or negative impact

1.8 Conceptual frame work

This is a theoretical structure of assumptions, principles, and rules that holds together the ideas comprising a broad concept. It is structured from a set of broad ideas and theories that help a researcher to properly identify the problem they are looking at, frame their questions and find suitable literature. It is used to guide in data collection and analysis.

-Policies

Risk management

Other variables Dependent variable

-Risk identification
-Risk quantification
-Risk analysis
-Risk response
-Risk monitoring and control

Intermediate variables

- Prevention of financial loss
-Risk awareness
-Quality management
-Business plans
-Communication
-Business growth

Private business institutions

Independent variable Consequential variables

EKJ&CIE Environment-Rwanda

Source: Field research, June 2011

Private business development is one of development leading factors in any country. However, there are many factors that influence this growth either inside the business institution itself or from outside of it. One of those factors is the government policies (other variables) in relation with trade, taxes etc. In Rwanda for instance, the doing business policy allows new entrepreneurs to register in Rwanda development board and start the business within 24 hours only.

The business establishment is not enough, it requires other factors for its growth and sustainability like risk management (dependent variable) among others. This is a continuous process whose purpose is to clarify the importance and events for tackling the risks that the business may face. Risk management is important because it gives the ability to figure out methods for which events can be managed, especially those events that may have an adverse impact on the financial or human capital of the organization.

This includes the information about the evaluation of various risks and four options for managing each risk (intermediate variables) which are risk identification, quantification, response and risk monitoring and control. This is a proactive process and not reactive.

The implementation of the risk management process illustrated above leads to the following positive outcomes (consequential variables); prevention of financial losses whereby resources are well planned and allocated, risk awareness by all employees of the institution by following internal rules and regulations and obeying the law among others which leads to quality management, establishing good business plans, adequate communication within the business organisation which in combination lead to a business growth of the institution (independent variable)