Volume : 6, Issue : 6, June - 2017

Weighted average approach to calculation of Risk Management Index for Assessing Effectiveness of Risk Management Efforts

Mr Sonal Ashok Jaiswal, Dr. Kishor N. Jagtap

Abstract :

<p>&nbsp;<span style="text-align: justify;">Risk Management Index (RMI) is a quantitative approach to measure the efficiency and effectiveness of risk management. It is a relatively new concept. In the present methodology of computing the RMI the ranks assigned by the respondents to various risk indicators on a defined scale are simply averaged and the RMI is calculated with reference to the maximum scale value.</span><span style="text-align: justify;">&nbsp; </span><span style="text-align: justify;">Anomaly with this kind of calculation is that the different risk indicators are considered of equal significance in relation to each other, which practically is not the case. This article proposes the concept of weighted average approach to RMI calculation with an intention of getting a more realistic picture of the status of risk management duly taking into account the significance of each of the risk indicator as well as the oad risk groups with each other.&nbsp;</span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><o:p></o:p></p>