Lecture 2 - What is risk?

Question 1

Define Risk

Answer 1

• It is defined in AS/NZS ISO 31000:2018 as “the effect of uncertainty on objectives”
• Notes:
  – An effect is a deviation from the expected. It can be positive, negative or both and can create or result in opportunities and
  threats.
  – Objectives can have different aspects and categories, and can be applied at different levels.
  – Risk is usually expressed in terms of the risk sources, potential events, and their consequences and their likelihood.

Question 2

What is the risk management process?

Answer 2

Scope, Context, Criteria
Risk Assessment - risk identification, analysis and evaluation
Risk Treatment
Reporting and Recording

Question 3

What is risk management?

Answer 3

• Risk management – coordinated activities to direct and
  control an organization with regard to risk.

Question 4

What is risk source?

Answer 4

• Risk source – element which alone or in combination has
  the potential to give rise to risk.

Question 5

What is an event?

Answer 5

• Event – occurrence or change of a particular set of
  circumstances.

– Note 1: An event can have one or more occurrences , and can have several causes and several consequences
– Note 2: An event can also be something that is expected which does not happen, or something that is not expected that does.
– Note 3: An event can be a risk source.

Question 6

Define Consequences

Answer 6

• Consequence – outcome of event affecting objectives

– Note 1: A consequence can be certain or uncertain and can have positive or negative direct or indirect effects on objectives.
– Note 2: Consequences can be expressed qualitatively or quantitatively.
– Note 3: Any consequence can escalate through cascading and
cumulative effects.

Question 7

Define Likelihood

Answer 7

• Likelihood – chance of something happening

– Note 1:In risk management, the work ‘likelihood’ is used to refer to the chance of something happening, whether defined, measured or determined objectively or subjectively, qualitatively or quantitatively, and described using general terms or mathematically (such as a probability or a frequency over a given time period).

Question 8

Define Control

Answer 8

• Control – measure that maintains and/or modifies risk
  – Note 1:Controls include, but are not limited to, any process, policy, device, practice or other conditions and/or actions which maintain or modify risk.
  – Note 2: Controls may not always exert the intended or assumed modifying effect.

Question 9

Define Stakeholder

Answer 9

Stakeholder– person or organization that can affect, be affected by, or perceive themselves to be affected by a decision or activity.
– Note 1:The term ‘interested party’ can be used an an alternative to stakeholder.

Question 10

What are the principles of risk management?

Answer 10

Integrated
Structued and Comprehensive
Customised
Inclusive
Dynamic
Best Available Information
Human and Cultural Factors
Continual Improvement

Question 11

What does leadership and commitment consist of in the risk management framework

Answer 11

Integration
Design
Implementation
Evaluation
Improvement