Organizational Chart; a technique to Identify Risk

Basically there are two types of organizational charts. One is general and the other is auxiliary. General organizational chart describes the structure of the organization where as Auxiliary organizational chart supports the general chart. Basically many organizations have made a formal organizational chart but if that chart is not available then the risk manager can himself create a chart for his convenience.

The organizational chart is very useful in identifying the risk as it explains the activities of organization and structure of the organization. The organizational chart can be limited to the organization and it can also be extended outside the organization to show that on which suppliers and other departments the organization depends. The organizational chart will help the risk manager to locate the area where there will be risk concentration; in addition to this the risk manager will also be able to know that in the organization, who is having the highest authority and who will help him out for the implementation of risk management strategies.

Let us now consider the example of Organizational Chart of any Production company, producing edible items.

ORGANIZATIONAL CHART

Organizational Chart

The biggest risk involved in this type of production is that if the production becomes unhygienic. If there is no damage to the product and the sealing or packing is destroyed then too it would be a total loss. So the risk manager should concentrate on this area. Risk Manager should identify the area of concentration and the area of dependency, in the organizational chart showed above milk will be the area of dependency. So the risk manager should concentrate on that point, milk can be sterilized or preserved for future time. Risk manager should make sure that the employees should wear caps and gloves while producing the product. The production area should be neat and clean. The biggest challenge will be to see that from where the milk is coming. Milk centers will be created and chillers will be installed under the supervision of risk manager. So the organizational chart helped the risk manager to locate the area of risk and the dependency of the production process.