International Journal of Application or Innovation in Engineering & Management (IJAIEM)
Web Site: www.ijaiem.org Email: editor@ijaiem.org, editorijaiem@gmail.com
Volume 1, Issue 2, October 2012
ISSN 2319 - 4847
Risk Management and Its Impact on Productivity
in Industrial Units for Wardha District - A
Strategic Management Centered Approach
Rohit R. Manjule1, Dr. Mohan S. Jagnade2
1
T&P officer and Assistant Professor,
DES’s College of Engineering and Technology, Dhamangaon Rly(MS), India
2
HOD of Department of Commerce,
G. W. Arts & Commerce College, Nagbhid.
ABSTRACT
Awareness of the Risk Management is low in the Industries and calls for efforts to integrate in the operations of the industrial
unit. Risk Management through a Strategic Management centered approach improves the Productivity and creates immense
value for the organization. Risk Management has to be an essential part of Strategic Management of an organization in
running the Industrial unit safely and efficiently in light of the emerging global business scenario. One of the important factors
in terms of optimizing the operation is the way value at risk involved in the task is handled. Thus, it becomes important to have
a proper risk management strategy in place to tackle the value at risk in an industrial unit. The aim of the research is to delve
into the level of risk management exercise undertaken and to study the imperatives thereon. Further, the study would involve
understanding the problem confronted while implementing and to identify the areas of improvement. Given the experience &
association with the industries in this belt, the researcher has familiarity & access to these units. Since the researcher has
background to support risk management activities, industries would be eager to know the benefits, hence are likely to cooperate in their own interest.
Keyword: - Risk Management, Industrial Growth, optimization, Faculty, Employee.
1. INTRODUCTION
Risk management [1,2,3] is an integrated process of describing specific areas of risk, developing a comprehensive plan,
integrating the plan and conducting ongoing evaluation. A process identifies loss exposures faced by an organization
and selects the most appropriate techniques including insurance for treating such exposures. Risk management is
broader concept and includes all techniques for treating loss exposures, At its most general level, risk is used to
describe any situation where there is un curtaining about what outcome will occur[2] . Risk may be objective or
subjective. Objective Risk is defined as the relative variation of actual loss from expected loss. Subjective Risk is
defined as uncertainly based on a person’s mental condition or state of mind. In most of the risky situations, two
elements are commonly found:
1. The outcome is uncertain i.e. there is a possibility that one or other(s) may occur. Therefore, logically, there are at
least two possible outcomes for a given situation.
2. Out of the possible outcomes, one is unfavorable or not liked by the individual or the analyst.
The future is largely unknown. Most business decision-making takes place on the basic of expectations about the future.
Making a decision on the basis of assumptions, expectations, estimates and forecasts of future events involves taking
risks[3]. Risk has been described as the “sugar and salt of life”. This implies that risk can have an upside as well
downside. People take risk in order to achieve some goal they would otherwise not have reached without taking that
risk. On the other hand, risk can mean that some danger or loss may be involved in carrying out an activity and
therefore, care has to be taken to avoid that loss[5]. This is where Risk Management is important, in that it can be used
to protect against loss or danger arising from a risky activity[6].
The risk management process involves the following logical steps:
Volume 1, Issue 2, October 2012
Page 164
International Journal of Application or Innovation in Engineering & Management (IJAIEM)
Web Site: www.ijaiem.org Email: editor@ijaiem.org, editorijaiem@gmail.com
Volume 1, Issue 2, October 2012
ISSN 2319 - 4847
1.
2.
3.
4.
5.
Defining the objectives of the risk management exercise.
Identifying the risk exposures
Evaluating the exposures
Critical analysis of risk management alternatives and selecting one of them
Implementation and review
Figure 1: Flow of Risk Management Process
In our paper, here we are describing Risk management and its impact on productivity in Industry Wardha and other
area in Maharashtra Region in India.
2. METHODOLOGY
2.1 Studies about the Area – Wardha
Wardha district is located on the north-eastern side of Maharashtra state in India. As per the 2001 Census, the
population of the Wardha district is 12,36,736. The male population is 638990 where as women population is
597776. Population of the district is increased by 15.87 percent in the 10 years span of 1991 to 2001. From the total
population, 20.40 percent population is of the urban area and 73.60 is of the rural area. The population of the urban
and rural areas are 3,25,041 and 9,11,695 respectively.
2.2 Research Methodology for implementing Risk Management
2.2.1 Primary data collection
The primary data collection in view of the objectives of the study involved preparation of research instrument
(interview schedule). Though development and measurement of research constructs is neither simple nor
straightforward, instrumentation techniques are available that allows us to construct research instruments that
constitute acceptable levels of reliability and validity.
2.2.2 Interview Schedule Development
Interview schedules are typically used for feedback research to determine the current status or "situation," or to estimate
the distribution of characteristics in an industrial population. Much of interview schedule construction is common
sense, but there are intricacies with which survey authors should be familiar. It is common sense to require that the
concepts be clearly defined and questions unambiguously phrased; otherwise, the resulting data are apt to be seriously
misleading. To overcome this problem,
2.2.3 Question types
Based on the objectives, questions/statements were framed such that each statement would yield Single response.
2.2.4 Reliability Estimation
Reliability is a measure of how consistent the results of using a survey questionnaire will be. By consistent we mean
that respondents understand the true meaning of the question as it is stated. Reliability was determined using a "pilot
test" with the proposed survey interview schedule
2.2.5 Final Selection of Items and Development of Instrument
A reliable measurement of the perception of senior officials working in industrial units for risk management strategies,
their awareness of the rules and regulations set by the statutory bodies, etc. is usually a difficult task; yet, it is obviously
a necessary precursor to understand the various issues of importance of risk management in industrial units.
3. RESULT AND DISCUSSION
Wardha district on the statement, which states that documentation of management’s attitude on risk management for
the benefit of all staff. It was evident that 60.4% (29) officials were strongly agree with the statement which states that
Volume 1, Issue 2, October 2012
Page 165
International Journal of Application or Innovation in Engineering & Management (IJAIEM)
Web Site: www.ijaiem.org Email: editor@ijaiem.org, editorijaiem@gmail.com
Volume 1, Issue 2, October 2012
ISSN 2319 - 4847
documentation of management’s attitude on risk management for the benefit of all staff, 25% (12) officials were agreed
with the statement, whereas 10.4% (5) officials were neutral with the statement.
Table 1: Documentation of management’s attitude on risk management for the benefit of all staff
Frequency Percent Cumulative Percent
Strongly Disagree
1
2.1
2.1
Disagree
1
2.1
4.2
Neutral
5
10.4
14.6
Agree
12
25.0
39.6
Strongly Agree
29
60.4
100.0
Total
48
100.0
Table 2 : Person responsible for risk management in organization
Person Responsible
Frequency
Percent
Cumulative percent
The Chief Executive Officer
-
-
-
Another senior executive
2
4.2
4.2
Head of Finance
-
-
4.2
A committee
6
12.5
16.7
The Risk Manager
22
45.8
62.5
The Internal Auditor
14
29.2
91.7
Other
4
8.3
100.0
Total
48
100.0
4. CONCLUSION
Risk management strategy has become an important, rather integral part of corporate strategy in recent years. Though
there have been some practices followed in the pas in a minor scale. Another area the is contributing to lack of
awareness is that , in most of the unit risk management professionals are not employed. Thus relaying mostly in the
insurance agent. Agent can provide the insurance services but may not be able to counsel the unit on risk management.
With liberalization of insurance sector in India, brokers can play an important role in not vital with risk management.
It may be concluded from the study results that Private sector risk management practitioners/consultants have
significantly less important role in development and implementation of risk management within the organizations in
Wardha district.
REFERENCE
[1] S.E. Harrinton and G.R. Michaus, Risk Management and Insurance, McGraw-Hill, 1999, P.3.
[2] Emmett J Vaughan, Risk Management, John Wiley & Sons, Inc., 1997, P.8
[3] Wilson, I., Strategic Planning Isn’t Dead-It Changed, Long-range Planning, August, 1994, P.20 (Reproduced in
Hunger and Wheelen, Op.cit., P.4)
[4] Hollman KW., Forrest JE., "Risk Management in a Service Business", International Journal of Service Industry
Management, 1991; 2(2):49 – 65
[5] Alexander K, "Facilities Risk Management", Facilities, 1992;10(4):14 – 18.
[6] White D., "Application of systems thinking to risk management:: a review of the literature", Management
Decision, 1995; 33(10):35 – 45
[7] Egbuji A, "Risk management of organizational records", Records Management Journal, 1999; 9(2): 93 – 116
AUTHOR
Rohit R. Manjule, is working as a training & placement officer & assistant professor in DES’S College of
engineering & technology, Dhamangaon rly, India. He has obtained his B.E.(Mining) & M.B.A.(Marketing)
degree from RTM Nagpur University, India. He is having 6 years of corporate Industry experience & 4 years
of academic experience. He has published various papers in International Journal & conference. He is active
member of Training & placement officer’s society, Nagpur. His research is mainly focused on Risk
Management & its impact on productivity.
Volume 1, Issue 2, October 2012
Page 166
International Journal of Application or Innovation in Engineering & Management (IJAIEM)
Web Site: www.ijaiem.org Email: editor@ijaiem.org, editorijaiem@gmail.com
Volume 1, Issue 2, October 2012
ISSN 2319 - 4847
Dr. Mohan S. Jagnade is a Chairman of board of studies, Commerce department, Gondwana University,
Gadchiroli. He is also HOD of department of commerce, G.W. Arts & Commerce College, Nagbhid. He
received his doctorate degree in Commerce from Nagpur University. He is having total 26 years of teaching
experience. He is a faculty member of board of studies, Commerce department of Nagpur University. He has
published various papers in international journal & conferences. His research is mainly focused on Risk
management.
Volume 1, Issue 2, October 2012
Page 167