Upside of Risk

Question 1

Define the upside of risk?

Answer 1

Opportunities that can be seized with a desirable outcome.

Question 2

What is the benefit of pursuing the upside of risk?

Answer 2

Seize an opportunity that competitors would be unwilling to do as they are too risk averse.

Question 3

What are the 5Ts?

Answer 3

Tolerate, Treat, Transfer, Terminate, Take the risk

Question 4

What is the Riskiness Index?

Answer 4

A semi qualitative approach to assessing total risk exposure by using the FIRM Risk Scorecard and taking into account:
- current firm strategy,
- projects that are in progress,
- nature of routine operations being undertaken

A score can be attributed to each (0 - No risk; 5 - Extreme risk)

These are benchmarked and changes can be tracked overtime. The firm can introduce controls to have STOC at the lowest level of risk as reasonably and cost-effectively possible.

Question 5

How might a firm assess the upside of risk when it comes to strategy?

Answer 5

1. Define mission statement
2. Define corporate objectives
3. Define main strategy and assess risks to it.
4. Implement strategy

Question 6

How might a firm assess the upside of risk when it comes to projects?

Answer 6

Accurate risk assessment of the project to ensure it is:
- delivered on schedule
- delivered within budget
- delivered to specification

Follow up with audit of the project.

Question 7

How might a firm assess the upside of risk when it comes to operations?

Answer 7

General operational risk management should deliver:
- competitive advantage
- reduce costs
- reduce operational risk events

Question 8

How might a firm achieve the upside of risk when it comes to compliance?

Answer 8

• Obtaining licenses to carryout regulated activity.
• Maintain a good relationship with the regulator and seeking tighter regulation in areas where you know you can achieve compliance whilst making things tougher for your competitors.