CHAPTER 02 Corporate Risk Management
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Transcript of CHAPTER 02 Corporate Risk Management
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BWRR3033: RISK
MANAGEMENTRodziah AhmadRisk Management Dept.
SEFB, COB UUM
Sintok, Kedah.
(c) Rodziah 1
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Chapter 2: Corporate Risk
Management Definition
The importance of risk management
Risk management standard
Risk management process Risk management vs Insurance management
Risk management objectives
Roles of risk manager
Enterprise Risk Management (ERM)
(c) Rodziah 2
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Learning Objective
Describe the evolution of modern risk management
Define and explain the meanings of risk management
Explain the importance of risk management
Distinguish between risk management and insurancemanagement
Describe the process of risk management
Comprehend the concepts of ERM
(c) Rodziah 3
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Evolution of Risk Management(c) Rodziah 4
RISK
SPECIFICOBJECTIV
E
INSURANCE
MANAGEMENT
PURE RISK
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Risk Management
Definition: Scientific approach to the problem ofdealing
with the pure risk faced by individuals and business.
(c) Rodziah 5
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Risk Management
Science to design and implement procedures thatminimize frequencyand severityof loss.
(c) Rodziah 6
RISK CONTROL
RISK
AVOIDANCE
RISK FINANCING
RISK
REDUCTION
RISK
RETENTIONRISK
TRANSFER
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1.Identification
2.Measurement
3.
Selection RMtechniques
4.
Implementation
5.
Reporting &
Monitoring
Risk Management Process(c) Rodziah 7
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(c) Rodziah 8
R
o
l
e
s
o
f
i s k m a na g e r s
1.Assist in developing RM policy
2.Engage in risk identification andmeasurement
3.Select risk financing alternatives
4.Negotiate insurance coverage
5.Manage insurance claims
6.Supervise internal administration
7.Communicate with other managers
8.Handle accounting9.Administers risk functions.
10.Supervise loss prevention
11.Manage employee benefits
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Post in Organizations
Risk Surveyors
Risk Executives
Risk Managers
Directors of Risk Management Vice President (Risk Management)
Chief Risk Officer
Report to CEO
(c) Rodziah 9
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(c) Rodziah 10
Enterprise RiskManagement
ERM in business are
methods and processesto manage risk and seize opportunities to
achieve enterprises objectives
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(c) Rodziah 11
Enterprise RiskManagement
Protect and create value for
Stakeholders
owners
customers
employees regulators
society
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(c) Rodziah 12
COSO Enterprise Risk Management Framework (2004)
Objec t ives
Compone
nts
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(c) Rodziah 13
ISO31000: New International Risk Management Standard (2009)
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(c) Rodziah 14
Common Challenges in ERM
Implementation:
Identify executive sponsors for ERM Establish common risk language
Describe entitys risk appetite
Identify risks in risk inventory
Implementing risk-ranking methodology
Establish risk committee and/or CRO
Establish risk owner
Demonstrate the cost-benefit of risk management effort
Develop action plans
Develop consolidated reports Monitoring results of actions taken to mitigate risk
Ensuring efficient risk coverage
Develop a technical ERM framework
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Risk Management Objective
To guarantee post-lost adequacy of resources
To minimize cost of dealing with pure risk
To protect employees from serious injuries and death
To meet legal & contractual objectives To eliminate worry
(c) Rodziah 15
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ULTIMATE GOAL
(c) Rodziah 16
17
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Risk Management Policy
1. Set Maximum Retention Limit
2. Minimum Retention level
3. Funding Retention Program
4. Employee Injuries
(c) Rodziah 17