The Evolution of Risk Management and the Risk Management Process
This chapter briefly describes the evolution of risk management. It illustrates the major stages of the risk management process, namely identification, analysis and response. The beneficiaries of risk management are outlined along with how risk management can be embedded into an organisation. A generic risk management plan (RMP) which forms the basis for all risk management actions and further risk activities for corporate, strategic business and project levels is discussed.
3.2 THE EVOLUTION OF RISK MANAGEMENT
Archibald and Lichtenberg (1992) state that risk is now openly acknowledged as part of real management life. Risk management is now considered to be one of the more exciting and important parts of planning and managing investments, assets and liabilities at corporate, strategic business and project levels, and is a function to be taken seriously.
3.2.1 The Birth of Risk Management
The idea of chance and fortune has existed in the most primitive of cultures. Playing games involving dice can be traced back at least 2000 years.
Probably the first insurance against misfortune was within a policy to cover the loss of cargo by shipwreck that had its origin in the Hummurabi Code. In the framework of that code the ship owner could obtain a loan to finance the freight, but it was not necessary to pay back the loan if the ship was wrecked.
The eighteenth century saw the rise of insurance ...