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Risk Management and Its Impact on Productivity in Industrial Units for Wardha District - A Strategic Management Centered Approach


International Journal of Application or Innovation in Engineering & Management (IJAIEM),Web Site: Email:,

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									International Journal of Application or Innovation in Engineering & Management (IJAIEM)
       Web Site: Email:,
Volume 1, Issue 2, October 2012                                         ISSN 2319 - 4847

   Risk Management and Its Impact on Productivity
      in Industrial Units for Wardha District - A
      Strategic Management Centered Approach
                                       Rohit R. Manjule1, Dr. Mohan S. Jagnade2
                                               T&P officer and Assistant Professor,
                            DES’s College of Engineering and Technology, Dhamangaon Rly(MS), India
                                                HOD of Department of Commerce,
                                            G. W. Arts & Commerce College, Nagbhid.

Awareness of the Risk Management is low in the Industries and calls for efforts to integrate in the operations of the industrial
unit. Risk Management through a Strategic Management centered approach improves the Productivity and creates immense
value for the organization. Risk Management has to be an essential part of Strategic Management of an organization in
running the Industrial unit safely and efficiently in light of the emerging global business scenario. One of the important factors
in terms of optimizing the operation is the way value at risk involved in the task is handled. Thus, it becomes important to have
a proper risk management strategy in place to tackle the value at risk in an industrial unit. The aim of the research is to delve
into the level of risk management exercise undertaken and to study the imperatives thereon. Further, the study would involve
understanding the problem confronted while implementing and to identify the areas of improvement. Given the experience &
association with the industries in this belt, the researcher has familiarity & access to these units. Since the researcher has
background to support risk management activities, industries would be eager to know the benefits, hence are likely to co-
operate in their own interest.
Keyword: - Risk Management, Industrial Growth, optimization, Faculty, Employee.

Risk management [1,2,3] is an integrated process of describing specific areas of risk, developing a comprehensive plan,
integrating the plan and conducting ongoing evaluation. A process identifies loss exposures faced by an organization
and selects the most appropriate techniques including insurance for treating such exposures. Risk management is
broader concept and includes all techniques for treating loss exposures, At its most general level, risk is used to
describe any situation where there is un curtaining about what outcome will occur[2] . Risk may be objective or
subjective. Objective Risk is defined as the relative variation of actual loss from expected loss. Subjective Risk is
defined as uncertainly based on a person’s mental condition or state of mind. In most of the risky situations, two
elements are commonly found:

  1. The outcome is uncertain i.e. there is a possibility that one or other(s) may occur. Therefore, logically, there are at
     least two possible outcomes for a given situation.
  2. Out of the possible outcomes, one is unfavorable or not liked by the individual or the analyst.

The future is largely unknown. Most business decision-making takes place on the basic of expectations about the future.
Making a decision on the basis of assumptions, expectations, estimates and forecasts of future events involves taking
risks[3]. Risk has been described as the “sugar and salt of life”. This implies that risk can have an upside as well
downside. People take risk in order to achieve some goal they would otherwise not have reached without taking that
risk. On the other hand, risk can mean that some danger or loss may be involved in carrying out an activity and
therefore, care has to be taken to avoid that loss[5]. This is where Risk Management is important, in that it can be used
to protect against loss or danger arising from a risky activity[6].

The risk management process involves the following logical steps:

Volume 1, Issue 2, October 2012                                                                                      Page 164
International Journal of Application or Innovation in Engineering & Management (IJAIEM)
       Web Site: Email:,
Volume 1, Issue 2, October 2012                                         ISSN 2319 - 4847

    1.   Defining the objectives of the risk management exercise.
    2.   Identifying the risk exposures
    3.   Evaluating the exposures
    4.   Critical analysis of risk management alternatives and selecting one of them
    5.   Implementation and review

                                     Figure 1: Flow of Risk Management Process
In our paper, here we are describing Risk management and its impact on productivity in Industry Wardha and other
area in Maharashtra Region in India.

  2.1 Studies about the Area – Wardha
Wardha district is located on the north-eastern side of Maharashtra state in India. As per the 2001 Census, the
population of the Wardha district is 12,36,736. The male population is 638990 where as women population is
597776. Population of the district is increased by 15.87 percent in the 10 years span of 1991 to 2001. From the total
population, 20.40 percent population is of the urban area and 73.60 is of the rural area. The population of the urban
and rural areas are 3,25,041 and 9,11,695 respectively.

   2.2 Research Methodology for implementing Risk Management
      2.2.1 Primary data collection
The primary data collection in view of the objectives of the study involved preparation of research instrument
(interview schedule). Though development and measurement of research constructs is neither simple nor
straightforward, instrumentation techniques are available that allows us to construct research instruments that
constitute acceptable levels of reliability and validity.
      2.2.2 Interview Schedule Development
Interview schedules are typically used for feedback research to determine the current status or "situation," or to estimate
the distribution of characteristics in an industrial population. Much of interview schedule construction is common
sense, but there are intricacies with which survey authors should be familiar. It is common sense to require that the
concepts be clearly defined and questions unambiguously phrased; otherwise, the resulting data are apt to be seriously
misleading. To overcome this problem,
      2.2.3 Question types
Based on the objectives, questions/statements were framed such that each statement would yield Single response.
      2.2.4 Reliability Estimation
Reliability is a measure of how consistent the results of using a survey questionnaire will be. By consistent we mean
that respondents understand the true meaning of the question as it is stated. Reliability was determined using a "pilot
test" with the proposed survey interview schedule
      2.2.5 Final Selection of Items and Development of Instrument
A reliable measurement of the perception of senior officials working in industrial units for risk management strategies,
their awareness of the rules and regulations set by the statutory bodies, etc. is usually a difficult task; yet, it is obviously
a necessary precursor to understand the various issues of importance of risk management in industrial units.

Wardha district on the statement, which states that documentation of management’s attitude on risk management for
the benefit of all staff. It was evident that 60.4% (29) officials were strongly agree with the statement which states that

Volume 1, Issue 2, October 2012                                                                                    Page 165
International Journal of Application or Innovation in Engineering & Management (IJAIEM)
       Web Site: Email:,
Volume 1, Issue 2, October 2012                                         ISSN 2319 - 4847

documentation of management’s attitude on risk management for the benefit of all staff, 25% (12) officials were agreed
with the statement, whereas 10.4% (5) officials were neutral with the statement.

           Table 1: Documentation of management’s attitude on risk management for the benefit of all staff
                                           Frequency Percent Cumulative Percent
                         Strongly Disagree          1             2.1                2.1
                             Disagree               1             2.1                4.2
                              Neutral               5            10.4               14.6
                               Agree                12           25.0               39.6
                          Strongly Agree            29           60.4              100.0
                               Total                48           100.0

                        Table 2 : Person responsible for risk management in organization
      Person Responsible                           Frequency       Percent         Cumulative percent
      The Chief Executive Officer                            -               -                       -
      Another senior executive                               2              4.2                     4.2
      Head of Finance                                        -               -                      4.2
      A committee                                            6             12.5                    16.7
      The Risk Manager                                      22             45.8                    62.5
      The Internal Auditor                                  14             29.2                    91.7
      Other                                                  4              8.3                    100.0
      Total                                                 48            100.0

Risk management strategy has become an important, rather integral part of corporate strategy in recent years. Though
there have been some practices followed in the pas in a minor scale. Another area the is contributing to lack of
awareness is that , in most of the unit risk management professionals are not employed. Thus relaying mostly in the
insurance agent. Agent can provide the insurance services but may not be able to counsel the unit on risk management.
With liberalization of insurance sector in India, brokers can play an important role in not vital with risk management.
It may be concluded from the study results that Private sector risk management practitioners/consultants have
significantly less important role in development and implementation of risk management within the organizations in
Wardha district.

  [1] S.E. Harrinton and G.R. Michaus, Risk Management and Insurance, McGraw-Hill, 1999, P.3.
  [2] Emmett J Vaughan, Risk Management, John Wiley & Sons, Inc., 1997, P.8
  [3] Wilson, I., Strategic Planning Isn’t Dead-It Changed, Long-range Planning, August, 1994, P.20 (Reproduced in
    Hunger and Wheelen, Op.cit., P.4)
  [4] Hollman KW., Forrest JE., "Risk Management in a Service Business", International Journal of Service Industry
    Management, 1991; 2(2):49 – 65
  [5] Alexander K, "Facilities Risk Management", Facilities, 1992;10(4):14 – 18.
  [6] White D., "Application of systems thinking to risk management:: a review of the literature", Management
    Decision, 1995; 33(10):35 – 45
  [7] Egbuji A, "Risk management of organizational records", Records Management Journal, 1999; 9(2): 93 – 116

                  Rohit R. Manjule, is working as a training & placement officer & assistant professor in DES’S College of
                  engineering & technology, Dhamangaon rly, India. He has obtained his B.E.(Mining) & M.B.A.(Marketing)
                  degree from RTM Nagpur University, India. He is having 6 years of corporate Industry experience & 4 years
                  of academic experience. He has published various papers in International Journal & conference. He is active
                  member of Training & placement officer’s society, Nagpur. His research is mainly focused on Risk
                  Management & its impact on productivity.

Volume 1, Issue 2, October 2012                                                                                  Page 166
International Journal of Application or Innovation in Engineering & Management (IJAIEM)
       Web Site: Email:,
Volume 1, Issue 2, October 2012                                         ISSN 2319 - 4847
              Dr. Mohan S. Jagnade is a Chairman of board of studies, Commerce department, Gondwana University,
              Gadchiroli. He is also HOD of department of commerce, G.W. Arts & Commerce College, Nagbhid. He
              received his doctorate degree in Commerce from Nagpur University. He is having total 26 years of teaching
              experience. He is a faculty member of board of studies, Commerce department of Nagpur University. He has
              published various papers in international journal & conferences. His research is mainly focused on Risk

Volume 1, Issue 2, October 2012                                                                            Page 167

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