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Final Period

This document discusses risk management and provides an overview of key concepts. It defines risk management as identifying, assessing, and developing strategies to manage risk. The document outlines the basic principles of risk management according to the International Organization of Standardization, including that risk management should create value, address uncertainty, be integrated into organizational processes, and allow for continual improvement. Finally, the document describes the process of risk management, including establishing context, planning, risk analysis, and mitigating risks.

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Rhea May Balute
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54 views

Final Period

This document discusses risk management and provides an overview of key concepts. It defines risk management as identifying, assessing, and developing strategies to manage risk. The document outlines the basic principles of risk management according to the International Organization of Standardization, including that risk management should create value, address uncertainty, be integrated into organizational processes, and allow for continual improvement. Finally, the document describes the process of risk management, including establishing context, planning, risk analysis, and mitigating risks.

Uploaded by

Rhea May Balute
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Final Period-Lessons

Introduction to risk management

 Chapter 11- Risk management

 Chapter 12- Practical Insight in reducing and managing business risks

CHAPTER 11

RISK MANAGEMENT

INTRODUCTION

Effective corporate governance cannot be attained without the organization mastering the art of risk
management; And risk management is recognized as one of the most important competencies needed
by the board of directors of modern Organization, large as well as small and medium sized business
firms. The level of risk face by business firm have increased because of the fast-growing sophistication of
organization, globalization, modern technology and impact of corporate scandals. In addition therefore
to compliance with legal requirements, top management should consider adequate knowledge of risk
management.

RISK MANAGEMENT DEFINED

Risk management is the process of measuring or assessing risk and developing strategies to manage it.
Risk management is a systematic approach in identifying, analyzing arid controlling areas or events with
a potential for causing unwanted change. Risk management is the act or practice of controlling risk. It
includes risk planning., assessing risk areas, developing risk handling options, monitoring risks to
determine how risks have changed and documenting overall risk management program.

As defined in the International Organization of Standardization (150 3 1000), Risk management is the
identification, assessment. and prioritization of risks followed by coordinated and economical
application of resources to minimize, monitor and control the probability and/or impact of unfortunate
events and to inirtim4e the realization of opportunities.

It is through risk management risk to any specific program are assessed and systematically managed to
reduce risk to an acceptable level. Risk can come from uncertainty in financial market, project failure,
legal liabilities, credit risk, accident, natural causes and disaster, as well.as deliberate attack
from.adversary or event, of uncertain or unpredictable root-cause.

BASIC PRINCIPLES OF RISK MANAGEMENT

The International Organization of Standardization (ISO) identifies the basic principles of risk
management.

Risk management should:

create value — resources spent to mitigate risk should be less than the consequence Of inaction, i.e..
the benefits should exceed the costs

address uncertainty and assumptions


be an integral part of the organizational processes and decision-making

be dynamic, iterative, transparent, tailorable, and responsive to change

create capability of continual improvement and enhancement considering the best available information
and human factors

be systematic, structured and continually or periodically reassessed

PROCESS OF RISK MANAGEMENT

According to the Standard ISO 31000 "Risk management — Principles and Guidelines on
Implementation, "the process of risk management consists of several steps as follows:

Establishing the Context. This will involve a. Identification of risk in a selected domain of interest

Planning the remainder of the process.

Mapping out the following:

the social scope of risk management ii. the identity and objectives of stakeholders iil. the basis upon
which risks will be evaluated, constrained.

Defining a framework for the activity and agenda identification.

Develop an analysis of risks involved in the

Mitigation Solution of risks using and organizational resources.

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