Types of risk
- Technological, financial, human resources (capacity, intellectual property), health, safety Sources of risk
- External can includes political, economic, natural disasters
- Internal includes reputation, security
What is at risk
- Areas of impact
- Types of exposure to people, program results, materials, real property
Ability to control the risk
- Mitigation through loss prevention and risk transfer
Risk Management works when:
- Aligned with an organization’s overall objectives, strategic direction, operating practices and internal culture
- It is a factor setting priorities and revenue allocation
- Integrated within existing governance and decision-making structures at the operational and strategic levels (board of directors)
Critical Success Factors
- Strong involvement by upper management
- Organized process for risk analysis and response
- Assignment of specific risk responsibilities
- Workplace where employees understand their role in managing risk
Risk Management Objectives
- Preserve the organizations assets, reputation and operations
- Minimize disruption of the operations
- Manage risk in the most cost effective manner
Capacity for Managing Risk?
- Governance and decision-making structures
- Planning processes
- Infrastructure
- Human and financial resources
Current risk management culture;
its risk management processes and practices, includes:
- Management’s knowledge, skills, experience, risk tolerance, propensity and willingness to take risk
- Strategic direction
- What elements affect risk decisions
- How risk is managed
Balance of Techniques considers:
- The entity’s risk tolerance
- Laws or internal rules
- Cost versus benefit
- Cost advantages
Pre-Loss Objectives
- Economy of Operations Tolerable Uncertainty Legality Humanitarian Conduct
Post-Loss Objectives
- Survival Continuity of Operations Stability of earnings and funding
The Analytical Process
- 1. Identify and analyze the entity’s risks
- 2. Evaluate risk management techniques that address those risks (what will work best)
- 3. Select the most appropriate techniques
- 4. Implement the selected techniques
- 5. Monitor and change the risk management program as needed (make sure it continues to work well)
