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CG Risk management pdf

The document outlines the concept of risk and the importance of Enterprise Risk Management (ERM) in identifying, assessing, and mitigating risks to ensure organizational sustainability. It details the roles and responsibilities of the Risk Management Committee (RMC) and the board's oversight in establishing risk management frameworks and policies. Additionally, it describes the risk management process, objectives, principles, and the necessity of comprehensive reporting for effective risk governance.

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Kazi Farin Ahmed
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27 views3 pages

CG Risk management pdf

The document outlines the concept of risk and the importance of Enterprise Risk Management (ERM) in identifying, assessing, and mitigating risks to ensure organizational sustainability. It details the roles and responsibilities of the Risk Management Committee (RMC) and the board's oversight in establishing risk management frameworks and policies. Additionally, it describes the risk management process, objectives, principles, and the necessity of comprehensive reporting for effective risk governance.

Uploaded by

Kazi Farin Ahmed
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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# Concept of Risk

Risk is the potential for loss, damage, or any other negative outcome due to uncertainty in
decision-making or external factors. It can arise from various sources, including financial
instability, operational inefficiencies, regulatory changes, technological disruptions, and market
volatility. Businesses must identify, assess, and manage risks to ensure long-term sustainability
and profitability.

# Enterprise Risk Management (ERM) and Its Framework

Enterprise Risk Management (ERM) is a structured approach that organizations use to manage
risks holistically. It integrates risk management into corporate strategy, ensuring that risks are
identified, assessed, mitigated, and monitored systematically. The ERM framework includes the
following key components:

1. Risk Identification – Recognizing potential risks that may impact the organization.
2. Risk Assessment – Evaluating the likelihood and impact of identified risks.
3. Risk Response – Developing strategies to mitigate, accept, transfer, or avoid risks.
4. Monitoring & Reporting – Continuously tracking risks and making necessary
adjustments.
5. Governance & Compliance – Ensuring adherence to regulatory requirements and
industry best practices.
6. Integration with Strategy – Aligning risk management with business objectives.

# Risk Management Committee (RMC) and Meeting

The Risk Management Committee (RMC) is a specialized board-level committee responsible for
overseeing an organization’s risk management practices. It ensures that a structured and
disciplined approach is applied to risk assessment and mitigation. RMC meetings are held
periodically to:

 Review existing and emerging risks.


 Evaluate the effectiveness of risk mitigation strategies.
 Recommend corrective actions.
 Ensure compliance with regulatory requirements.

# Roles and Responsibilities of RMC

The RMC plays a crucial role in maintaining a robust risk management framework. Its key
responsibilities include:

1. Identifying and Assessing Risks – Evaluating risks that may impact business operations.
2. Developing Risk Mitigation Strategies – Recommending policies and procedures to
reduce risks.
3. Monitoring Risk Management Processes – Ensuring the effectiveness of risk controls.
4. Reporting to the Board – Providing insights on risk trends and mitigation measures.
5. Ensuring Compliance – Aligning risk policies with regulatory and governance
standards.
6. Encouraging Risk Awareness – Promoting a risk-conscious culture within the
organization.

# Risk Management Objectives

The objectives of risk management include:

1. Protecting Business Assets – Safeguarding financial and physical resources.


2. Enhancing Decision-Making – Providing insights for strategic planning.
3. Ensuring Regulatory Compliance – Meeting legal and industry standards.
4. Reducing Uncertainty – Mitigating the impact of unexpected events.
5. Maximizing Opportunities – Identifying and leveraging risk-related opportunities.
6. Improving Stakeholder Confidence – Enhancing trust and transparency.

# Risk Management Principles and Policies

Risk management should adhere to the following principles:

 Proactive Approach – Anticipate and address risks before they escalate.


 Integration – Embed risk management into all business processes.
 Accountability – Clearly define roles and responsibilities.
 Risk-Based Decision Making – Prioritize risks based on their potential impact.
 Continuous Improvement – Regularly update risk strategies based on new threats.
 Transparency – Communicate risk-related information effectively.

Policies should establish clear guidelines for:

 Risk assessment methodology.


 Roles and responsibilities in risk management.
 Escalation and reporting processes.
 Compliance with legal and regulatory requirements.

# Board’s Oversight on Risk Management

The Board of Directors plays a critical role in risk oversight by:

 Establishing a risk management framework.


 Approving risk management policies and strategies.
 Monitoring high-priority risks and mitigation efforts.
 Reviewing risk reports from the RMC.
 Ensuring that the company’s risk appetite aligns with business objectives.

# Steps in Risk Management Process


1. Risk Identification – Detecting potential risks that may impact business operations.
2. Risk Assessment – Evaluating the probability and consequences of risks.
3. Risk Prioritization – Categorizing risks based on severity and likelihood.
4. Risk Mitigation Planning – Developing and implementing risk reduction measures.
5. Risk Monitoring & Review – Continuously tracking risks and updating mitigation
strategies.
6. Reporting & Communication – Ensuring stakeholders are informed about risks and
responses.

# Risk Mitigation Strategy

Organizations can adopt the following risk mitigation strategies:

1. Risk Avoidance – Eliminating activities that pose high risks.


2. Risk Reduction – Implementing controls to minimize risk exposure.
3. Risk Sharing/Transfer – Transferring risk through insurance or partnerships.
4. Risk Acceptance – Acknowledging risks when mitigation is not feasible or cost-
effective.

# Risk Governance at Management Level

Risk governance at the management level ensures:

 Clear accountability and reporting structures.


 Risk-informed decision-making at all levels.
 Integration of risk management with operational processes.
 Development of risk awareness programs for employees.
 Regular risk assessment and policy updates.

# Comprehensive Risk Management Report

A risk management report provides a summary of an organization’s risk profile and mitigation
efforts. It typically includes:

1. Executive Summary – Overview of key risks and risk management strategies.


2. Risk Assessment Findings – Analysis of identified risks and their impact.
3. Mitigation Strategies – Actions taken to minimize risks.
4. Compliance and Regulatory Updates – Adherence to governance and legal
requirements.
5. Risk Trends and Emerging Threats – Insights into future risks.
6. Recommendations – Suggestions for improving risk management practices.

By implementing a structured risk management approach, organizations can safeguard their


interests, maintain regulatory compliance, and achieve long-term success.

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