Evaluation

The next stage after identifying risks with full imaginations is evaluation. This is the stage in PRM where you evaluate how the risks give impact to you. As you often hear, there are high risks with high returns and low risks with low returns. This saying is usually heard in monetary investment such as stocks, bonds, bank's deposits and so on. Stocks, for example, involve high returns but at the same time high risks. Contrarily, national bonds are categorized into the low risk-low return although there are risky national bands issued by politically unstable countries. More specifically, investors even individual ones carry out the detailed analyses of risks and returns in the investments. Investment is also the subject for PRM because investment today is part of the daily life especially for future's livelihood.

This saying contains very important ideas when it comes to thinking of the second step in PRM (risk management has also been developed in the investment world). When you want to invest your assets, you may keep in mind both of returns and risks at the same time. PRM covers a broad range of activities such as the very small behaviors of just walking to investments as I often quote, communications, anything that give impacts on your life. The evaluation in PRM is done by considering what return will come on an influence's base.

To evaluate returns, however, there are many cases in which returns can't be evaluated in money. Personal behaviors are not always done on profit bases different from company's ones. As I mention previously, companies do their business mostly in order to make profits as going concerns. Contrarily, individuals don't necessarily have economic reasons for the behaviors. You imagine, for example, going on a picnic, playing golf, watching videos at home, shopping, dating and any other many activities. Those returns are not money but the returns of pleasure or something. It seems that personal behaviors, in principal, are based on rather consuming. Doing jobs is one of the exceptions in addition to investments. Yet, even in these areas, there are a lot of risks that can't be evaluated in money. As a result, it's not proper to evaluate in PRM how much exactly the risks are. Instead, you have to evaluate how influential the risks are to your life. It’s rather impossible and troublesome to evaluate them every time you behave. Like the simple evaluation methods I introduce in CRM, individuals just understand how high the risks are or how low they are.

Nevertheless, in the case that you were actually damaged some kind of accidents and hospitalized for a while, you would suffer from the certain amount of medical expenditures unless you could retrieve the liability from the wrongdoer or you'd take out insurance. In the occasion, it’s necessary to assume how much money you are supposed to pay. For other occasions such as a fire on your properties, a traffic accidents you cause, you also need to evaluate the risks on a monetary base. These risks are mostly covered by insurance. So you better leave the measurements of risks to insurance professionals who are competent in do so. Namely, there are risks evaluated in money and not. If you can evaluate risks on a monetary base, you should do it with the helps of experts. In the process if you know how much money you suffer resulting from risks, you will come to recognize how influentially the risks give impact on your life. What’s important at the stage of evaluation is that you recognize how influential the returns of activities are.

It seems to be difficult to let you understand this simple evaluation method in abstract expressions. Here are a couple of examples in terms of helping your imaginations. First, Let’s imagine that you will have to attend a very important meeting in the early morning tomorrow. You may be giving significant presentations to the board members of your company there. It’s up to you to imagine how serious the meeting is. In the situation that often happens in businessperson’s life, what kind of risks you can think of? You may be late for oversleep, an accident on your way to the nearest station, train delays. Fortunately, even though there aren’t any accidents before the start of the meeting, or because you are a good risk manager, you get to work much earlier just added precaution, something may happens during the meeting. For example, you give terrible presentations because your lack of sleep for the preparations or you have diarrhea caused by a little heavy drinks last night. A single your expression in the presentations might outrage the board members. There are many scenarios you can come up with even in meetings. The more serious the events are, the more deeply you have to imagine what may happen. In the case above, Let's think of the influence if you failed. You might probably not in charge of important jobs any more, you would be transferred to less important sections, your salary could be reduced or for the worst scenario, you might be fired. What I insist on the influence at this stage is its results caused by the exposure of risks.

For another example of a picnic, some people believe that it’s one of the most important events in their life. Actually going on a picnic is surely a occasion to strengthen family ties. More people are maybe trained to command full imaginations in this kind of event. First of all, you just start with the thought of where you are going usually by being given some advice from your family. And then you may come up with a detailed picnic plan such as which route you will go on. It should be by train or car? Moreover, what time you should leave home, where to have launch? You may also think of what you need for the picnic in preparing a purchasing list of what to bring with. During the process of the pleasant considerations, you must command full imaginations on what will happen. Since most of the imaginations are something enjoyable, some people can’t even sleep the day before the event to their great delight. If you can imagine that there are hazards to give an influence to you and your family, how would you evaluate the risks? The hazards might be muddy conditions after it rained heavily a couple of days ago, you drive a car on long ways with the bad bodily conditions because of hard work in the weekday. Under these situations, what would you do with the picnic plan? Some people would forcefully carry out the enjoyable plan even though there are hazards because families are looking forward to the picnic or you have to compensate for the usual lazy commitment to families. Let’s evaluate the risk. There are some hazards that might spoil the picnic. If you can image that you get an traffic accident on its way due to your sleepiness, or you and your family get injured on slippery mountain roads, the risks would increase. Contrarily, what return you would obtain form this picnic. Is it enjoyments, strong family tie, pastime? These are, of course, very fruitful results. But, in comparison to the uncertain risks under the negative hazards, you have to think twice whither or not you forcefully carry out the plan before actually starting it. Depending on how people think of influences, it's better not to do what does not deserve. How to dispose of the risks in these kinds of situations is the next subject. The section gives you the idea of evaluating risks.