Risk Management

GROUP 3
DELA CRUZ, ERICA JOY
BARROGA, FRIDAY PAMELA
NUEDA, RUBY ROSE
ROQUE, PRINCESA
Risk Management
  Definition of Risk and Risk Management

  Importance of Risk Management

  Effective Risk Management

  The Risk Management Cycle

  Categories of Risks

  Risk Register

  Tips for Success

Risk Management
  A risk is an uncertain event which may
occur in the future

 A risk may prevent or delay the

achievement of an organization's
objectives or goals

What is Risk?  A risk is not certain – its likelihood can

only be estimated

Note: Not all risk is bad, some level of risk

must be taken in order to make progress
and prevent downtrend. 
What is Risk Management?

Risk management is the process of assessing, managing and mitigating losses.  

It is a process to:

 Identify all relevant risks

 Assess those risks

 Address the risks in order of priority

 Monitor risks and report on their management

Risk Management – why do we need it?

Promotes good management.

May be a legal requirement depending upon industry or sector.

Resources available are limited. Therefore, a focused response

to risk management is needed.
Effective Risk Management

An effective risk management framework seeks to protect

an organization's capital base and earnings without hindering growth.
Furthermore, investors are more willing to invest in companies with good risk
management practices. This generally results in lower borrowing costs, easier
access to capital for the firm, and improved long-term performance.  
The Risk Management Cycle
Risk Management Cycle – Step 1

What is risk management process?

 Define purpose

 Strategy, High-level plan

 Goals
Risk Management Cycle – Step 2

Risk Identification
What are the threats and uncertainties associated with my organization's objectives?

  Separate the risk into its cause and possible effect

  Be concise and clear

  Do not concentrate on symptoms only

Risk Management Cycle – Step 2
Risk Management Cycle – Step 2

Assess the risks

  Impact

  Likelihood

 Prioritize the risks

  Get input from appropriate individuals
Risk Management Cycle – Step 3

Risk Mitigation
 Implement process changes to reduce the impact of each risk and a response
plan for if it happens.
Risk Management Cycle – Step 4

Risk Monitoring

Monitoring the status of risks, monitoring the effectiveness of mitigation plans

implemented, and consulting with key stakeholders are all parts of the risk
monitoring step. Risk monitoring should happen throughout the risk management
process.

  Use a standard format for capturing risk data

  Review all risks at least annually

  Serious risks to be reviewed more often depending on circumstances

Risk Management Cycle – Step 5

Risk Reporting

You need to document, analyze, and share the progress of your risk management
plan. Reporting on risks serves two key purposes: It helps you analyze and
evaluate your risk management plan and helps keep stakeholders engaged in
mitigating risks by sharing the progress made. How often should I share
reports? Quarterly? Annually?

   Report on risk to senior management or board

  Make "risk register" available to stakeholders to show good governance

   Financial Risk

Categories   Operational Risk

of Risks   Reputational Risk

  Governance and Compliance

  Strategic
Financial Risk

Financial risk is the possibility of losing money on an investment or business

venture.

  Reduction in funding

  Failure to safeguard assets

  Poor cash flow management

  Lack of value for money

  Fraud/theft
Tools to control Financial Risk

  Fundamental Analysis or the process of measuring a security's intrinsic value

by evaluating all aspects of the underlying business including the firm's assets
and its earnings.

  Technical Analysis  or the process of evaluating securities through statistics

and looks at historical returns, trade volume, share prices, and other
performance data.

  Quantitative Analysis or the evaluation of the historical performance of a

company using specific financial ratio calculations.
Operational Risk
Operational risk summarizes the uncertainties and hazards a company faces when it
attempts to do its day-to-day business activities. These risks result from failed or
inappropriate policies or procedures.

  Failure of an IT system

  Poor quality of services

  Lack of succession planning

  Health and safety risks

  Staff skill levels

Reputational Risk

Reputational risk is a threat or danger to the good name or standing of a

business. It can occur in the following ways:

  Directly, as the result of the actions of the company

  Due to the actions of an employee or employees

  Through other peripheral parties, such as joint venture partners or suppliers

  Poor stakeholder relations

Governance and Compliance

  Lack of oversight by board

  Segregation of duties are not defined formally

  Ensuring compliance with applicable legislation

Strategic

Strategic risks are those that arise from the fundamental decisions that
directors take concerning an organization's objectives. Essentially, strategic
risks are the risks of failing to achieve those objectives.

  Fails to engage in an activity that would support the organization's objectives.

  Technological changes

  Regulatory changes
 A risk register is a management tool used to record
relevant details relating to risks. It is a database of
information on risks.

12 key elements
Risk
Risk Identification phase
Register
1. Risk Category

2. Risk Description

3. Risk ID 
 Risk Analysis phase.

4. Project Impact
12 key 5. Likelihood
elements of 6. Consequence
a Risk Risk Evaluation phase.
Register 7. Risk Rank 

8. Risk Trigger
 Risk Analysis phase.

4. Project Impact
12 key 5. Likelihood
elements of 6. Consequence
a Risk Risk Evaluation phase.
Register 7. Risk Rank 

8. Risk Trigger
 Risk Treatment phase.
12 key 9. Prevention Plan
elements of 10. Contingency Plan
a Risk 11. Risk Owner
Register 12. Residual Risk
How to make a risk register?

  Identify the risks

  Collect the risks

  Document the risks

  Monitor the risks

  Resolve the risks

Project manager to
track the risks.
 Poor governance and “tone at the organization”

Reckless risk-taking

Why Risk Inability to implement effective ERM

Management
May Fail
Nonexistent, ineffective or inefficient risk assessment

Not integrating risk management with strategy-

setting and performance management
Tips for Success

Involve all levels of staff

Controls must be relevant
and management in the
and effective
process

Ensure that risk owner

takes responsibility for Focus on risk cause, not its
management of risks under symptoms
their control
THANK YOU!