Chapter 1 risk management
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Transcript of Chapter 1 risk management
Definition Risk Management The process of determining the maximum
acceptable level of overall risk to and from proposed activity, then using risk assessment technique to determine the innitial level of the risk and if this excessive, developing a strategy to ameliorate appropriate individual risks until the overall level of risk is reduce until acceptable level.
Chapter 1 Risk Management
Risk management is the identification, assessment, and prioritization of risks (defined in ISO 31000 as the effect of uncertainty on objectives, whether positive or negative) followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities
Risks can come from uncertainty in financial markets, threats from project failures (at any phase in design, development, production, or sustainment life-cycles), legal liabilities, credit risk, accidents, natural causes and disaster as well as deliberate attack from an adversary, or events of uncertain or unpredictable root cause.
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Risk to What?Risk to achievement the objectives
Risk is “ A chance of of something happening that can effect the objectives
Theory and Concepts
Risk Management does not exist in isolation by itself or for itself . The Risk Management exist if need to satisfy the other party in any condition of the third party.
Why does Risk Management Exist
What can happen How , why can it happen?
Identify the Risk
Political Technologies Economic External Events Management activities People events ( Behavior, culture, gender,
Lifestyle, ETC
Risk can happen from this sources
Evaluate the Risk with 2 factors i) The probability of something happening that
we don't want ii) the consequences if it does. For Example An airplane flight is a very good
example. The consequence of a airplane crash is usually the loss of most, if not all life on board - dreadful. Fortunately, when we fly, the probability of being in an airplane crash is very small (1 in 52.6 million according to the National transportation Safety Board). This very low probability makes the risk very acceptable
Two Factors of Concept of Risk
1. Political Those with failure either the government policy
or uncertainties of government political scenario For Example Wrong political priorities Not meeting government agenda Too slow or failure to modernize Decision based on incorrect information Unfulfilled promises to electorate Community planning oversight / errors
Category of Risk
2 Economic those affecting the ability of the Council to
meet its financial commitments. These include internal budgetary pressures, the failure to purchase adequate insurance or the consequences of proposed investment decisions.
For Example General/regional economic problems Missed business and service opportunities Failure of major projects Failure to prioritise, allocate appropriate
budgets and monitor Inadequate control over expenditure or
income Inadequate insurance cover
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Social those relating to the effects of changes in
demographic, residential or socio-economic trends on the Council’s ability to deliver its objectives
For Example Failing to meet the needs of disadvantaged
communities Failures in partnership working Problems in delivering life-long learning Impact of demographic change Crime and disorder
Technology Those associated with the capacity of the
Council to deal with the pace / scale of technological change, or its ability to use technology to address changing demands. They may also include the consequences of internal technological failures on the Council’s ability to deliver its objectives.
For Example Breach of confidentiality Failure in communications Insufficient disaster recovery for key
data/systems Failure of big technology related project Breach of security of networks and data Failure to comply with IT Security Policy
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Legislative Those associated with current or potential
changes in national or International law For Example Inadequate response to new legislation Not meeting statutory duties/deadlines Failure to implement legislative change Misinterpretation of legislation Exposure to liability claims e.g. motor accidents,
wrongful advice Breach of confidentiality / Data Protection Act
Environment Those relating to environmental
consequences of progressing the Council’s corporate objectives (e.g. in terms of energy, efficiency, pollution, recycling, etc).
For Example Impact on sustainability initiatives Impact of planning & transportation policies Noise, contamination and pollution Crime & Disorder Act implications Inefficient use energy and water Incorrect storage/disposal of waste
Competitive Those affecting the competitiveness of the
service (in terms of cost of quality) and / or its ability to deliver best value.
For Example Take over of services by government Failure of bids for government funds Failure to show value for money Accusations of anti-competitive practices
Customer / Citizen Those associated with the failure to meet
the current and changing needs and expectations of customer and citizens
For Example Lack of appropriate consultation Bad public and media relations
Reputation Those relating to public confidence and failure to
recruit high caliber staff For Example Adverse media attention Policies misunderstood or misinterpreted Negative implications identified by other which have
not been previously considered Failure to keep partners on side Breach of confidentiality Lack of business continuity plan Failure to maintain and upkeep land and property
Partnership Those associated with working in partnership
with another organization For Example Non compliance with procurement policies Poor selection of partner Poor contract specification, deficiencies Failure of partner to deliver Inadequate contract terms & conditions Bad management of partnership working
1. Strategic Risk Management How to strategize to tackle and manage the
Risk 2. Credit Risk Default or non payment debtors Payment Schedule 3.Operational Risk 4. Market Investment , Cash Flow 5.IT Risk or System management Risk 6. Legal Risk / Reputation Risk
The Six Domains of Risk