¶ … Risk identification is an underdeveloped art" Discuss and include an overview of risk identification aids and techniques in your answer. Risk identification is an underdeveloped art that can be better served by incorporating into risk management the various aids, techniques and helps that can be generated from working with and integrating various entities within the overall risk management solution. The reason risk identification lacks full development is entities fall into the trap of failing to adequately hedge against loss, focusing solely on pure loss exposure -- even though there is no upside to such a practice and the best that can occur in such a case is that the investment does not break down. Risk identification can, however, actually boost one's upside potential even as it mitigates risk. To this end, the risk identification aids, techniques and helps can be incorporated into the overall strategy of the risk manager.

There are various entities available to help the risk manager with his task: these include accountants, finance department personnel, marketing department personnel, production engineers, and HR personnel. Accountants can help the risk manager to identify fraud in accounting, identify loss exposure, properly allocate costs related to risk management, and assist in the collection of data for insurance companies as well as for any other occasions that risk managers might want said data compiled. Finance teams can assist risk managers in analyzing the effects that disruptions in profits/cash flows have on the organization, how to adequately assess what is and what is not an acceptable risk level, the exposure of purchases, and the cost of insurance on securitized loans. Marketing departments can help risk managers by providing safe product packaging, product descriptions that are accurate and not misleading, appropriately allocating legal responsibility for products, reducing risks associated with transporting products, and reflecting the cost of the product realistically within the product's price. Production and engineering staff can help risk managers by concerning themselves with safety in terms of product design and assembly/production lines (consistently and always adhering to safety regulations), identifying and noting any signs of danger regarding products, and reducing costs associated with safety hazards and losses from haphazard production. HR personnel can help risk managers by devising and implementing employee benefit packages and other incentives like pension plans, encouraging a workplace culture of safety and accountability, promoting proper training and proper risk education, controlling and/or eliminating the spread of injuries/diseases, and promoting industrial safety and hygiene within the organization.

Thus, if each of these parts is doing its job in terms of...

It is, essentially, each level of support within the organization taking upon itself a risk management perception of conduct that encourages proper facilitation of organizational aims.
However, the risk manager can further develop the art of risk identification by employing the various risk identification techniques, such as employing a) cause convergent (bottom up) risk identification strategy, b) hazard and operability (HAZOP) studies, or c) fault trees. Each of these techniques produces various impacts on the organizational safety and assists in mitigating attendant risks of operations and investment, ensuring that organization is better situated to obtain its goals.

The first technique -- cause convergent (bottom up) risk identification -- consists of analyzing an organization's possibilities of creating loss-producing events and what might cause such events to occur and what the impact or effect of the event would be. It is essentially a strategy in which the risk manager examines the various incidents that might occur, such as a natural phenomenon, human action, or a breach within natural law, and then determines the possible effects -- from liability/injury to property damage to loss of earnings. Identifying these variables/events and their outcomes gives the risk manager a better perception of the overall issues facing an organization, and from there the manager can address the appropriate channels within the organization about mitigating risk by adopting specific procedures/policies that would ensure better safety within and preparation for an event.

The second technique -- HAZOP studies -- involves deconstructing various complex risk situations/issues into more manageable units which can then be better assessed, analyzed, understood and addressed. This method is particularly appropriate for risk managers looking to make an impact on the planning stage of an organization's outlook. The process is begun by asking a series of questions, such as: What is the purpose of ABC? How could ABC deviate from this stated purpose or its defined intention? What would be the cause of the deviation? What effects would the deviation have? In what ways can the hazard represented by this exchange be mitigated, reduced, or removed altogether?

Each of these questions could be asked at every level and in every department of an organization in order to maintain clarity of purpose and a risk-free zone of pursuit of objectives and aims. By working in teams, individuals can coordinate and excel in developing sufficient and satisfactory HAZOP studies through a combination of skills, perceptions, and knowledge. It is essentially like brainstorming together in a conference room and drawing…