2.3 - Risk Management Flashcards
What is a risk?
The possible variation in an outcome from what is expected to happen. and will adversely affect the achievement of objectives.
What is uncertainty?
the inability to predict the outcome from an activity due to a lack of infomation
Downside risk is?
the risk that something will go wrong
Upside Risk is?
if it is likely that things will go right
Pure risk is?
Possibility that something could go wrong
Speculative risk is?
possiblity that something could go better than expected
What is an oppertunity?
the possibilty that an event will occur and positively affect the achievement objectives.
What are the risks for investors?
Lenders - fail to make interest payamnets or pay loan principle
Stakeholders - if the company becomes insolvent they will loose all their investment. (carry the ultimate risk)
what is a risk appitite?
the extent to whoch businness in preapred to take risks in order to achieve objectives
what are the 3 attitdes to risk?
Risk Adverse
Rsk neutral
Risk seeking
What does Risk Adverse mean?
an investment would be chosen if it has a more certain but possibly lower return that an alternative with more risk but potential higher return.
What does Risk Neutral mean?
an investment is chosen according to return without considering risk at all
What is risk seeking?
an investement would be chosen on the basis of it offering higher levels of risk.
How do you Calculate expected return?
Epx - sum of probability times predicted annual return.
What types of risk are there?
Buiness and Non-biness
non business can be financial and operational
What are the 4 risk concepts? and what do they mean?
Exposure - what riska re we open to?
Volatility - are the risks going to change?
Impact - what result woudl the risk cause?
Probability - means how likely it is each risk will occur
What is cyber risk?
any risk of finncial loss, disruption or manage to the reuptaion of m organisation from som sort of failure of its info technology system
whata re the three cycber risks?
deilntrate breaches of secuirty
unitentional breaches of security
poor operational ingetrity
what is cyber attack
a delbrerate action through the internet aginst an organisation of causing loss, damage or disruption to activities.
What are th two types of cyber attack and what do they mean?
Hcking - access computuer networks by useing software and tools
DDoS - botnets onverwhlem online services by increasing internet traffic
all staff should be trained in how to respond to these
What is cyber security?
the prtection of systems, networs and data in cyberspace; the procedures used by a business to protect its information system from damage, disruption or loss.
Exmaples of cyber secuirty?
Access controls - passwords Firewalls Malware prtection Patch management Secure Cofiguration
what is risk managment?
the identification, analysis and economic control of risks which threaten the assets or earning capacity of a business. there may be legal requirement to manageong risk.
what are the 4 steps in the risk management process
awareness and identification
analysis: assessment and measurement
response and control
monitoring and reporting
