Risk Management Lessons Flashcards
ISO 31000 is separated into what three risk management areas?
Principles
Framework
Process
What is the ISO 31000 intended as?
A generic guidelind document
What do the ISO 31000 principles section emphasise?
That RM is an integral part of an organisational process and decision making
What do the ISO 31000 framework section emphasise?
Help organisations integrate RM into their management framework
What do the ISO 31000 process section emphasise?
Covers risk identification, assessment and management
What is FERMA?
Federation of European Risk Management Associations
Why does IRM retain its support FERMA?
Outlines practical and systematic approach to RM for business managers
UK Stock Exchange listed companies are required to…
document risk management arrangements to support good governance
ERM depends on people and so…
brings a risk of unreliability
What terminology does FERMA use?
ISO
What are KRI’s and KCI’s?
KRIs = key risk indicators KCIs= Key control indicators
What do KRIs help with?
Identify increases in probability of incidents occuring
What do KCIs help with?
indicating controls are not wokring effectively or have failed
What decision did Equitable Life’s management make?
To sell products that were only profitable ub tines of high inflation + minimal reserves
What contributed to the company’s demise?
- high risk business strategy
- forceful executives
Why didn’t Equitable lifes governance checks work?
non-executive directors were incompetent/bullied
- nO CONTOGNECY CAPITAL
- No access to to further shareholder funds
covid shows…
What can happen if serious risks are not identified
Greenfall shows…
consequences of a known risk being ignored or hidden
What is the essence of benchmarking?
comparing your performance with best practice examples on a regular basis
What is the essence of the AIRMIC,alarm IRM philosophy regarding RM and organisation culture?
RM must be integrated into the culture
WHY is COSO internal control framework used in US organisations and their overseas branches?
compliance satisfies us legal requirements for financial reporting set out in Sarbanes-oxley
What was the key decision that led to the demise of Equitable Life and why was it so important?
Full distribution policy
What pay structures criticised for contributing to financial crisis?
multi-million salaries. Targets short term
Two main business reasons for the collapse of Equitable Life were:
high guarantees on its pension products and overly generous payouts.
The aviation industry is known for having a no blame safety culture at its heart. This means that:
those within the industry are encouraged to learn from events and near misses.
One of the signs that risk management is embedded within an organisation is:
risk management issues will feature prominently in the annual report.
The main purpose of the Public Interest Disclosure Act 1998 is to:
encourage individuals to report instances of wrongdoing within an organisation.
