Assessing & Managing Risk

Question 1

Risk Management Process

Answer 1

1. Set responsibilities
2. Set risk appetite
3. Identify risks
4. Assess risks
5. Risk response
6. Monitor & review
7. ‘Rinse & repeat’

Question 2

Risk Response Strategies

Answer 2

High Reduce Avoid

Profitability
Accept Transfer
Low (Share)
Low Impact High

Question 3

Residual Risk

Answer 3

Gross risk + Risk response = Residual risk (acceptable?)

Question 4

Four Lines of Defense

Answer 4

First:
*Management controls
*Internal control measures

Second:
*Financial control
*Security
*Risk management
*Quality
*Inspection
*Compliance

Third:
*Internal audit

Forth:
*External audit

Question 5

Risk Appetite

Answer 5

The nature & strength of risks that an organisation is PREPARED to bear

Question 6

Risk Attitude

Answer 6

The directors’ views on the level of risk that they consider desirable

Question 7

Risk Capacity

Answer 7

The nature & strength of risks that an organisation is ABLE to bear

Question 8

ALARP

Answer 8

As Low As Reasonably Practicable

Consider if cost to reduce risk will outweigh benefit