RISK MANAGEMENT

POLICY OUTLINE

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 TABLE OF CONTENTS
Risk Management Policy Glossary ...............................................................................................3
Foreword .........................................................................................................................................3

CHAPTER ONE
1.0 INTRODUCTION....................................................................................................................3
1.1 Background ............................................................................................................................3
1.2 Corporate Governance............................................................................................................4
1.3 Definition of Risk and Risk Management ..............................................................................5
CHAPTER TWO

2.0 PURPOSE OF THE POLICY, OBJECTIVES AND PROCESS ........................................7

2.1 Purpose of the Policy..............................................................................................................7

2.2 Policy Objectives ....................................................................................................................7
2.3 Risk Management Process .....................................................................................................7
CHAPTER THREE
3.0 POLICY STATEMENT AND APPROACHES ....................................................................9
3.1 Policy Statement .....................................................................................................................9
3.2 Organizational Approaches to Risk Management ..................................................................9
3.3 Options to dealing with Risks ................................................................................................9
CHAPTER FOUR

4.0 RESPONSIBILITY FOR RISK MANAGEMENT ............................................................12

4.1 Management .........................................................................................................................12
4.2 Staff .....................................................................................................................................12
4.3 Board ...................................................................................................................................12

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 RISK MANAGEMENT POLICY- GLOSSARY

1. RISK APPETITE

“Risk appetite” means the qualitative and quantitative statements that define the general attitude
within an organization towards the desired level of risk. Risk appetite looks at how much risk a
company is willing to accept.

2. RISK TOLERANCE

“Risk Tolerance” means the maximum level of variation from this desired level of risk that an
undertaking is willing (or possibly able) to accept.
In general, the setting of risk appetite and risk tolerance may be considered as being part of the
same process

Before determining what to do about risks, it must be considered the amount of risk the
organization is prepared to tolerate. This will vary according to the perceived importance of
particular risks.

3. RISK
Risk is ‘the possibility that an event will occur and adversely affect the achievement of objectives’

INHERENT RISK: (GROSS RISK)

The risk that an activity would pose if no controls or other mitigating factors were in place (the
gross risk or risk before controls)

RESIDUAL RISK: (NET RISK)

The risk that remains after controls being taken into account (the net risk or risk after controls).

4. RISK CONTROL
Control activities are the policies and procedures that help to ensure that risk management
strategies are properly executed.

5. RISK ASSESSMENT

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Risk assessment is the estimation of the magnitude or level of risk–the extent to which potential
events have an impact on achievement of objectives
The magnitude/level of risk is assessed by considering the impact/effect/consequence of the event
on achievement of an objective and the likelihood/probability of the event taking place in future
Risk assessment employs both qualitative and quantitative techniques

6. RISK MANAGEMENT
Risk management is defined as the process of balancing the risk associated with business activities
with an adequate level of control that will enable the business to meet its objectives.
It is the application of a management system to risk and includes identification, analysis, treatment
and monitoring and evaluation

7. RISK OWNER
Risk owner is the person(s) responsible for managing risks and is usually the person directly
responsible for the strategy, activity or function that relates to the risk.

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