Ch.15 Operational and Enterprise Mgmt Flashcards
What are the purposes of the risk management process for an organization?
Minimizes the losses from adverse affects of actual and potential losses.
What are the roles of the risk management committee and the chief risk officer (CRO)?
- Oversight to management regarding the identification and evaluation of ERM related issues.
- Governance of significant risk
What are the six steps in the risk management process?
- Determine the tolerance
- Identify Potential Exposures
- Quantify the Exposure
- Develop and implement an appropriate risk Mgmt strategy
- Monitor the exposure and evaluate the strategy
- Review and modify the strategy as needed
What are the objectives of qualitative assessment with respect to measuring exposure as part of general
risk management?
- examines the risks and identifies mitigating strategies
- Risk assessment
- Ensures derivatives follow proper procedures.
Describe the four basic approaches to developing and implementing a risk management strategy.
- Avoid the risk
- Mitigate the risk
- Transfer the risk
- Retain the risk
What is enterprise risk management?
- Identifying, measuring and managing the various risks that threaten the achievement of the organization.
What are the key elements that should be contained in an organization’s risk management policy?
- Contain concise statement of the organizations risk managment goals
- Define authorities and responsibilities
- Identify types of exposures
- Delineate the mitigation techniques
- Process for monitoring
- Outline contingency plans
- require periodic review of the policy and testing of plans
What is operational risk?
- risk of direct and indirect losses resulting either from external events or failed processes/people/systems
What are the four basic types of market risk?
- Equity price risk
- Interest rate risk
- FX risk
- Commodity price risk
Discuss the concepts of disaster recovery and business continuity.
- Restoration of systems and C2 after an event causes and outage. The ability to handle crisis managment
Name three types of internal operational risk
- Employee risk
- Process risk
- Technology risk
Name eight types of external operational risk.
- Financial
- Counter party
- Legal and regulatory Compliance
- Supplier Risk
- External Theft/Fraud
- Physical and Electronic risk
- Natural disaster risk
- Terrorism
What are three critical factors to consider in determining an operational risk management strategy??
- Importance of the organizational culture
- Importance of technology
- Importance of guidelines for the BOD
What are the four goals of using insurance to mitigate risk?
- Insure against catastrophic loss
- Decide when and what to insure
- Manage the purchase and use of insurance
- Obtain efficient pricing for insurance needs
What are the key factors to consider when selecting an insurer?
- LT solvency of the insurer
- Ratings
- Service provided
- Cost vs exposure
- Industry knowledge and experience
