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Risk management
Who uses Risk Management?
How is Risk Management used?
What is Risk Management?
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Good management practice
Process steps that enable improvementin decision making
A logical and systematic approach
Identifying opportunities Avoiding or minimising losses
What is Risk Management?
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Risk Management is the name givento a logical and systematic methodof identifying, analysing, treatingand monitoring the risks involved in
any activity or process.
What is Risk Management?
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Risk Management is amethodology that helps managersmake best use of their available
resources
What is Risk Management?
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Risk Managementpractices are widely used
in public and the privatesectors, covering a widerange of activities oroperations.
These include:
Who uses Risk Management?
Finance andInvestment
Insurance
Health Care
Public
Institutions
Governments
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Effective Risk Managementis a recognised and valued skill.
Educational institutions have formalstudy courses and award degrees in RiskManagement.
The Risk Management process is wellestablished. (International RM processstandards.)
Who uses Risk Management?
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Risk Management isnow an integral part of business
planning.
Who uses Risk Management?
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The Risk Management
process steps are ageneric guide forany organisation,regardless of the
type of business,activity or function.
How is Risk Management used?
There are7steps
in the RMprocess
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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 constantchange, so the process includescontinuing:
Communication & consultation
Monitoring and review
and
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The Risk Management process:
The strategic and organisational contextin which risk management will take place.
For example, the nature of yourbusiness, the risks inherent in yourbusiness and your priorities.
Communicate & consult
Establish the context
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The Risk Management process:
Communicate & consult
Monitor and review
Defining types of risk, for instance,Strategic risks to the goals and
objectives of the organisation. Identifying the stakeholders, (i.e.,whois involved or affected).
Past events, future developments.
Identify the risks
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The Risk Management process:
Communicate & consult
Monitor and review
Analyse the risks
How likely is the risk event to happen?
(Probability and frequency?)What would be the impact, cost orconsequences of that event occurring?(Economic, political, social?)
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The Risk Management process:
Communicate & consult
Monitor and review
Evaluate the risks
Rank the risks according to
management priorities, by risk categoryand rated by likelihood and possiblecost or consequence.
Determine inherent levels of risk.
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The Risk Management process:
Treat the risks
Develop and implement a plan with specificcounter-measures to address theidentified 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:
Document your risk management plan anddescribe the reasons behind selecting the
risk and for the treatment chosen.
Record allocated responsibilities, monitoringor evaluation processes, and assumptions on
residual risk.
Communicate & consult
Monitor and review
Treat the risks
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The Risk Management process:
Communicate & consult
Risk Management policies and decisionsmust be regularly reviewed.
Monitor and review
In identifying, prioritising and treating risks,organisations make assumptions and decisions
based on situations that are subject tochange, (e.g., the business environment,trading patterns, or government policies).
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TheRisk Management process:
Risk Managers must monitor activities andprocesses to determine the accuracy of
planning assumptions and the effectivenessof the measures taken to treat the risk.
Methods can include data evaluation,
audit, compliance measurement.
Communicate & consult
Monitor and review
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The Risk Management process:
Establish the context
Identify the risks
Analyse the risks
Evaluate the risks
Treat the risksMonitoringand
review
Comm
unication
&
consult
ation
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