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Lecture 1

Risk management is a systematic process used by organizations across industries to identify, analyze, and minimize risks. It involves establishing the context, identifying and analyzing risks, evaluating them based on likelihood and impact, treating risks through a documented plan, monitoring the risks, and regularly reviewing and communicating about the process. The goal is to improve decision-making and reduce losses.

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Abhinav Agarwal
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Download as PPT, PDF, TXT or read online on Scribd
23 views

Lecture 1

Risk management is a systematic process used by organizations across industries to identify, analyze, and minimize risks. It involves establishing the context, identifying and analyzing risks, evaluating them based on likelihood and impact, treating risks through a documented plan, monitoring the risks, and regularly reviewing and communicating about the process. The goal is to improve decision-making and reduce losses.

Uploaded by

Abhinav Agarwal
Copyright
© © All Rights Reserved
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Risk Management
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What is Risk Management?

Who uses Risk Management?

How is Risk Management used?

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What is Risk Management?

• Good management practice


• Process steps that enable improvement
in decision making
• A logical and systematic approach
• Identifying opportunities
• Avoiding or minimising losses
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What is Risk Management?

Risk Management is the name given


to a logical and systematic method
of identifying, analysing, treating
and monitoring the risks involved in
any activity or process.

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What is Risk Management?

Risk Management is a
methodology that helps managers
make best use of their available
resources

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Who uses Risk Management?

• Finance and
Risk Management Investment
practices are widely used
• Insurance
in public and the private
sectors, covering a wide • Health Care
range of activities or
• Public
operations.
Institutions
These include:
• Projects

• Governments Next
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Who uses Risk Management?

• Effective Risk Management


is a recognised and valued skill.

• The Risk Management process is well


established. (International RM process
standards.)

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Who uses Risk Management?

Risk Management is
now an integral part of business
planning and project managemet

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How is Risk Management used?

The Risk Management


process steps are a There are
generic guide for 7 steps
any organisation, in the RM
regardless of the process
type of business,
activity or function.

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The basic process steps are:

Establish the context

Identify the risks

Analyse the risks

Evaluate the risks

Treat the risks

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‘Risk’ is dynamic and subject to constant


change, so the process includes
continuing:

Monitoring and review

and

Communication & consultation

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The Risk Management process:

Establish the context

The strategic and organisational context


in which risk management will take
place.
For example, the nature of your
business, the risks inherent in your
business and your priorities.

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The Risk Management process:

Identify the risks

Defining types of risk, for instance,


‘Strategic’ risks to the goals and
objectives of the organisation.
• Identifying the stakeholders, (i.e.,who
is involved or affected).
• Past events, future developments.

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The Risk Management process:

Analyse the risks

How likely is the risk event to happen?


(Probability and frequency?)
What would be the impact, cost or
consequences of that event occurring?
(Economic, political, social?)

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The Risk Management process:

Evaluate the risks

Rank the risks according to


management priorities, by risk
category and rated by likelihood and
possible cost or consequence.
Determine inherent levels of risk.

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The Risk Management process:

Treat the risks

Develop and implement a plan with specific


counter-measures to address the
identified risks.
Consider:
• Priorities (Strategic and operational)
• Resources (human, financial and technical)
• Risk acceptance, (i.e., low risks)
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The Risk Management process:

Treat the risks


Document your risk management plan and
describe the reasons behind selecting the
risk and for the treatment chosen.
Record allocated responsibilities, monitoring
or evaluation processes, and assumptions on
residual risk.

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The Risk Management process:

Monitor and review

In identifying, prioritising and treating risks,


organisations make assumptions and decisions
based on situations that are subject to
change, (e.g., the business environment,
trading patterns, or government policies).
Risk Management policies and decisions
must be regularly reviewed.

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The Risk Management process:

Monitor and review


Risk Managers must monitor activities and
processes to determine the accuracy of
planning assumptions and the effectiveness
of the measures taken to treat the risk.
Methods can include data evaluation,
audit, compliance measurement.

Communicate & consult


Next

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