Risk Management Flashcards
What is Risk management
Analysing the probability of an event taking place and then pro-actively planning to minimise negative impact & capitalise on possibilities
Risk/ Opportunity
-Economic growth/ recession
- Political developments
- Technological advancements
- Changes is legislation
- change in customer demand
What is strategic planning
Formulating the business’s vision, mission and value statement, organisational structure, as well as the goals and objectives
Why is Risk Management implemented
To ensurer the strategic plan & business operations are aligned
What is a Risk profile
The degree that a business is willing to accept risks in pursuit of achieving business goals
What is risk culture
The shared attitude in the business towards accepting risks results to rewards for risk taking/ risk- avoiding
What are the types of risks
- Operational risks
- Country risks
- Environmental risks
- Financing risks
- Reputational risks
- Strategic risks
Components of Risk Management
- Risk Assessment
- Risk Management Policy
- Risk response
- Risk reporting
Components of Risk assessment
Identification
Description
Estimation of impact
Risk management policy
A comprehensive policy must be communicated to all relevant parties implemented
- Allow business to respond to risk identified
Risk response
A risk plan that considers all opportunity costs consequence is needed for choosing a suitable risk response
- must be monitored to measure effectiveness
Different types of risk responses
- risk avoidance
- risk reduction
Risk acceptance
Risk reporting
Reporting to internal stakeholders- people involved in decision-making
Reporting to external stakeholder- create loyalty
