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    Principles of Risk Management

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    Sherly Escandor
    The document outlines the key principles of risk management. It discusses defining risk and the risk management process, which includes risk assessment, treatment, communication, monitoring and review. It also covers risk management strategies like avoiding, transferring, mitigating and accepting risk. The principles of risk management are that it should create value, be part of decision making, be dynamic and iterative, tailored, and take human factors into account. Limitations include incomplete information, uncertainty, cost, human factors and limited scope.

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    Principles of Risk Management

    Uploaded by

    Sherly Escandor
    43 views15 pages
    The document outlines the key principles of risk management. It discusses defining risk and the risk management process, which includes risk assessment, treatment, communication, monitoring and review. It also covers risk management strategies like avoiding, transferring, mitigating and accepting risk. The principles of risk management are that it should create value, be part of decision making, be dynamic and iterative, tailored, and take human factors into account. Limitations include incomplete information, uncertainty, cost, human factors and limited scope.

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    The document outlines the key principles of risk management. It discusses defining risk and the risk management process, which includes risk assessment, treatment, communication, monitoring and review. It also covers risk management strategies like avoiding, transferring, mitigating and accepting risk. The principles of risk management are that it should create value, be part of decision making, be dynamic and iterative, tailored, and take human factors into account. Limitations include incomplete information, uncertainty, cost, human factors and limited scope.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    43 views15 pages

    Principles of Risk Management

    Uploaded by

    Sherly Escandor
    The document outlines the key principles of risk management. It discusses defining risk and the risk management process, which includes risk assessment, treatment, communication, monitoring and review. It also covers risk management strategies like avoiding, transferring, mitigating and accepting risk. The principles of risk management are that it should create value, be part of decision making, be dynamic and iterative, tailored, and take human factors into account. Limitations include incomplete information, uncertainty, cost, human factors and limited scope.

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    PRINCIPLES OF

    RISK MANAGEMENT
    • Give the main idea of the
    various principles of risk
    management.

    INTENDED • Conceptualize the principles of

    LEARNING risk management.

    • Provide an understanding of
    OUTCOME the principles to enable the
    production of the optimum
    strategy for the handling of risk
    in the organization.
    TOPICS
    What is Risk Management

    Risk Management Strategies

    Components of the Risk Management Process

    Types of Risk Management

    importance of risk management

    Principles of Risk Management

    Limitations to Risk Management


    R I S K – W H AT D O E S I T M E A N ?

    • ISO 31000 defines risk as the “effect of uncertainty


    on objectives” and notes that “(a)n effect is a
    deviation from the expected.”
    RISK MANAGEMENT
    • Risk management is the process of identifying, assessing, and
    controlling risks that could potentially impact an organization's
    objectives. Effective risk management involves developing a
    plan to avoid or mitigate those risks, as well as responding to
    and managing any incidents that do occur.
    FIVE MAIN COMPONENTS RISK
    MANAGEMENT PROCESS

    • Risk assessment: The process of identifying, analyzing, and


    evaluating risks to determine the likelihood and potential impact of
    harm.
    • Risk treatment: The process of selecting and implementing
    strategies to modify, avoid, transfer, or accept the identified risks.
    • Risk communication: The process of sharing information about
    risks, including their likelihood and potential consequences, with
    stakeholders. Effective risk management requires clear and open
    communication between all stakeholders.
    • Risk monitoring and review: The process of tracking and
    assessing the effectiveness of risk management strategies
    over time and making adjustments as necessary.
    • Risk culture: The values, beliefs, and behaviors related to
    risk that are shared within an organization, which can
    influence how risks are perceived, managed, and
    communicated.

    FIVE MAIN COMPONENTS RISK


    MANAGEMENT PROCESS
    RISK
    MANAGEMENT
    S T R AT E G I E S
    • Avoiding the risk
    • Transferring the risk
    • Mitigating the risk
    • Accepting the risk
    • Monitoring and reviewing the risk
    TYPES OF RISK MANAGEMENT

    Strategic Risk Management: This type of risk management involves


    identifying risks associated with an organization's strategic goals and
    objectives

    Operational Risk Management: Operational risk management involves


    identifying, assessing, and controlling risks that arise from the day-to-
    day operations of an organization.
    TYPES OF RISK MANAGEMENT

    Financial Risk Management: Financial risk management involves


    identifying, assessing, and controlling risks related to financial transactions
    and investments.

    Compliance Risk Management: Compliance risk management involves


    identifying, assessing, and controlling risks related to regulatory
    compliance.

    Reputational Risk Management: Reputational risk management involves


    identifying, assessing, and controlling risks related to an organization's
    reputation.
    I M P O R TA N C E O F R I S K
    MANAGEMENT
    • Minimizing Losses
    • Protecting Reputation
    • Complying with Regulations
    • Improving Decision-making
    • Increasing Efficiency
    • Encouraging innovation
    PRINCIPLES OF RISK MANAGEMENT

    Risk management Risk management


    should be an integral
    should create part of organizational
    value. processes.

    Risk management
    Risk management
    should be based on
    should be part of
    the best available
    decision-making.
    information.
    PRINCIPLES OF RISK MANAGEMENT

    Risk management should Risk management Risk management should


    be a dynamic and should be tailored. take into account human
    iterative process. and cultural factors.
    L I M I TAT I O N S TO
    RISK
    MANAGEMENT
    • Incomplete information
    • Uncertainty
    • Cost
    • Human factors
    • Limited scope
    • Over-reliance

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