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General concept of risk and risk management with related standards


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introduction There is rapid development of risk management discipline There are many and varied views and description of what risk management involves, how it should be conducted and what is it for It has both an upside and a downside It is not something for organizations or institutions but for any activity whether short or long term Sako Mayrick


STANDARDS FOR FRAMEWORK The main source for establishing risk management framework is the International Organization for Standardization (ISO) ISO 31000:2009 is a natural successor to AS/NZS 4360:2004 Hopefully it will influence a revision of COSO It fits ‘ERM’ requirements, but also allows silo/project risk management Following ISO 31000 will provide a low cost, high chance of success approach to ERM ISO 31000 adds value and reduces risk in risk management ISO 31000 provides generic guidance on how to embed risk management, and reinforce the concept of “positive” risk Managing risk is about creating value out of uncertainty Sako Mayrick

What is risk:

What is risk Risk is the effect of uncertainty on objective Risk can be defined as the combination of the probability and event and its consequences In all types of undertaking, there is the potential for events and consequences that constitute opportunities for benefit (upside) and threats to success (downside) Sako Mayrick

Risk management:

Risk management Risk management is being concerned with both positive and negative aspects of risks In safety filed, it is recognized that consequences are only negative and therefore the management of safety risk is focused on prevention and mitigation of harm Risk management is a central part of any organization's strategic management It is the process whereby organizations methodically address the risks attaching to their activities with the goal of achieving sustained benefit with each activity and across the portfolio of all activities. Sako Mayrick

Risk management:

Risk management The focus of a good risk management is the identification, assessment and treatment of these risks. Its objectives is to add maximum sustainable value to all the activities of organization It considers the understanding of the potential upside and downside of those factors which can affect the organization. It increases the probability of success, and reduce both the probability of success, and reduces both the probability of failure and the uncertainty of achieving the organization's overall objectives. Sako Mayrick

Risk management:

Risk management RM should be a continuous and developing process which runs throughout the organization's strategy and implementation of that strategy. It should address methodically all the risks surrounding the organization's activities past, present and in particular, future. It should be integrated into the culture of the organization with an effective policy and a program led by most senior management. Sako Mayrick

Risk management:

Risk management RM must translate the translate the tactical and operational objectives, assigning responsibility throughout the organization. The risk management should be part of job description of each manager and employee RM supports accountability, performance measurement and reward, thus promoting operational efficiency at all levels Sako Mayrick

Drivers of key risks:

Drivers of key risks Sako Mayrick

Risk management process:

Risk management process Sako Mayrick

Advantages of risk management:

Advantages of risk management It protects and adds value to the organization and its stakeholders It provides a framework for an organization that enables future activity to take place in a consistent and controlled manner It improves decision making, planning and priotization by comprehensive and structured understanding of business activity, volatility e.t.c It contributes to a more efficient use of capital and resources within the organization It reduces volatility in the non essential company image It helps developing and supporting people and the organization's knowledge base Sako Mayrick

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