Categorizing Risks for Risk Ranking by Morgan et al Essay

Categorizing Risks for Risk Ranking by Morgan et al - Essay Example (CROUHY, et al., 2000) Risk categories provide a systematic and planned approach in identifying risks and mitigating them. Risk categorisation enhances range of risk identification leading to effective assessment (VAUGHAN, 1997), management and analysis process by which one can easily understand the nature of risks. It is almost impossible to develop one yard stick that fits for all the risks therefore, risk categorisation helps in arranging these risks in accordance to sources, area and effects of risk etc. Risk categorisation can also be based upon financial, regulatory compliance, safety, technology, security, environmental, strategic and stakeholder risks etc. (HAMPTON, 2009). So, dividing risks into categories provide adaptable cluster of risks that can be mitigated easily (GREGORIOU, 2007). When risk are categorised, it ensures filtering risks accurately as problems of double counting, fear inclusion of one risks or exclusion of another does not remain a concern anymore. Second ly when it comes to assigning scores to risks, categorised risks are easy to be scored as compared to uncategorised risks (AVEN, 2012). Risk categorisation is important is significantly important for assessing, ranking, managing, processing and mitigating risks (SMITH, 2005). Alternative Approaches to Categorisation The authors of this article presented three approaches and methods for categorization of risks which can be encompassed into three fields of literature (HUSSEY & HALL, 2008). First field of literature described by authors is psychological approach to categorise risks which is further subdivided into three approaches. In this approach it is assumed that risk is the subjective judgement of people (AVEN, 2008). Value judgement provides extensive analysis of risks yet can also be fatal if predicted immaturely (ISHIKAWA & TSUJIMOTO, 2009). One risk may not be important to second person as it is for the first person. Psychological approach further offer alternative subdivision as categorisation on basis of similarity (KIEV, 2002). Similarity risk categories help defining social and cognitional order of exploded population on which opinions are constructed and divided (SCHNEEWEIS, et al., 2010). Next alternative approach of risk categorisation is explanation based approach, in which based on understanding and relation between events, risks are arranged and categorised. After psychological approach, an alternative approach of Natural Sciences is prescribed which categorises risks considering the common characteristics of risks. Natural Sciences literature is defined through monothetic and polythetic classification (MOLAK, 1997). Whereas monothetic classification of risks comprise only specific risks that are sufficient enough to identify and explain the risk. On the other hand, polythetic classification of risks is a broad concept of arranging risks (Sutcliffe, 1994). Another proposed alternative approach is environmental psychological categorisation with subdivision of essentialist and constructivist perspective. Essentialist perspective requires similar features as necessary attribute to categorise risks whereas constructivist perspective supports adaptability and encourage categorisation designed upon stimuli presented at time to identify risks. Recommendations for Categorisation Authors have recommended to use an explanation based