What is risk management?
Summary
TLDRThis video script explores the critical role of risk management in organizational governance, emphasizing its importance in strategic planning, decision-making, and achieving objectives. It highlights the necessity of balancing risk-taking with risk avoidance, and the iterative nature of managing risks through various tools and processes, ultimately aiming to foster a risk-aware culture within the organization.
Takeaways
- đ Risk is defined as the effect of uncertainty on objectives.
- đą Risk management is a key component of an organization's governance framework.
- đĄ Managing risk helps in setting strategy, achieving objectives, and making informed decisions.
- đ° Taking risks is fundamental to an organization's profitability and strategic delivery.
- đ« Avoidance of risk can be detrimental to an organization's future.
- đ The board and management have a crucial role in overseeing risk management.
- đ The board should review and approve risk management policies and frameworks regularly.
- đ ïž Management is responsible for developing and implementing the risk management framework and internal controls.
- đ A risk management framework should document risk tolerance and risk appetite.
- đ Different types of risk include strategic, operational, emerging, people, and compliance risks.
- đ Common tools for risk identification and management include risk management processes, policies, self-assessment, risk matrices, scenario planning, and loss event databases.
Q & A
What is the definition of risk?
-Risk is defined as the effect of uncertainty on objectives.
Why is risk management important for an organization?
-Risk management is crucial as it helps organizations set strategy, achieve objectives, and make informed decisions.
How does taking risks relate to an organization's profits and strategy?
-Taking risks is fundamental to an organization making profits and a non-for-profit delivering on its strategy.
Why is risk avoidance potentially harmful to an organization?
-Avoidance of risk poses a threat to the future of the organization, as doing nothing can be considered the greatest risk in a dynamic external environment.
What is the role of the board in risk management?
-The board is responsible for overseeing risk management, reviewing and approving risk management policies and frameworks, and deciding on the nature and extent of risks the organization is prepared to take.
What is the responsibility of management in the context of risk management?
-Management is responsible for developing and implementing the risk management framework and its internal controls.
What should a risk management framework document?
-A risk management framework should document risk tolerance, risk appetite, and the levels of risk taking that are acceptable to achieve specific objectives.
What are the different types of risks mentioned in the script?
-The script mentions strategic risk, operational risk, emerging and people risk, and compliance risk.
What tools are commonly used in the identification and management of risks?
-Common tools include the risk management process, risk management policies and procedures, risk and control self-assessment, risk matrix, scenario planning, and loss event database.
How is the risk management process described in the script?
-The risk management process is described as iterative, involving continuous monitoring, reviewing, and focusing on continuous improvement.
What is the vision of the Governance Institute as mentioned in the script?
-The vision of the Governance Institute is to champion whole of organization governance and risk management through education, advocacy, and engagement with members and their broader community.
Outlines
đĄïž Risk Management Essentials
This paragraph introduces the concept of risk management as a critical component of an organization's governance framework. It emphasizes that risk is inherent in all business activities and is essential for achieving objectives, whether for profit or not. The script highlights the importance of taking risks for growth and innovation, while also noting that avoiding risks can be detrimental. The role of the board and management in overseeing risk management is discussed, including the need for regular review and approval of risk policies. The paragraph also outlines the components of a risk management framework, such as risk tolerance, risk appetite, and the types of risks (strategic, operational, emerging, people, and compliance risks). Tools for risk identification and management, like the risk management process, policies, procedures, self-assessment, risk matrices, scenario planning, and loss event databases, are mentioned. The iterative nature of the risk management process is stressed, highlighting the need for continuous monitoring and improvement. The paragraph concludes with a call to action to learn more about governance and risk management through the Governance Institute.
Mindmap
Keywords
đĄRisk
đĄRisk Management
đĄGovernance Framework
đĄStrategy
đĄInformed Decisions
đĄRisk Tolerance
đĄRisk Appetite
đĄRisk Management Process
đĄRisk Culture
đĄRisk Matrix
đĄScenario Planning
đĄLoss Event Database
Highlights
Risk is the effect of uncertainty on objectives.
Risk management is a key component of an organization's governance framework.
Managing risk helps in setting strategy, achieving objectives, and making informed decisions.
Taking risks is fundamental to an organization's profitability and strategic delivery.
Avoidance of risk can pose a threat to the future of the organization.
Doing nothing is probably the greatest risk in a dynamic external environment.
The board and management are responsible for overseeing risk management.
The board should review and approve the risk management policies and framework regularly.
Management is responsible for developing and implementing the risk management framework and internal controls.
A risk management framework should document risk tolerance and risk appetite.
Risk appetite is the level of risk an organization is willing to assume.
Understanding risk scope is crucial for making decisions and avoiding certain types of risks.
There are different types of risk including strategic, operational, emerging, people, and compliance risk.
Common tools for risk identification and management include risk management processes, policies, procedures, self-assessment, risk matrix, scenario planning, and loss event databases.
The risk management process is iterative, focusing on continuous improvement.
Developing a risk culture involves creating a workplace where staff can challenge assumptions and ask questions.
The vision of the Governance Institute is to champion whole of organization governance and risk management through education, advocacy, and engagement.
Governance Institute aims to strengthen society through governance excellence.
Transcripts
what is risk management risk is the
effect of uncertainty on objectives risk
management is one of the key components
of an organization's overall governance
framework managing risk assists
organizations in setting strategy
achieving objectives and making informed
decisions taking risks is fundamental to
an organization making profits and a
non-for-profit delivering on its
strategy innovation is risk growth is
risk at avoidance of risk poses a threat
to the future of the organization so
doing nothing is probably the greatest
risk in a dynamic external environment
management needs to consider the risk of
not taking a risk or not making a
decision recognizing and managing risk
is a crucial part of the role of the
board and management oversight of risk
management is the responsibility of the
board they should review and approve the
risk management policies and framework
on a regular basis in this way the board
decides on the nature and extent of the
risks it is prepared to take in order to
meet its objectives management is
responsible for developing and
implementing the risk management
framework and its internal controls the
approach to risk will vary across
organizations but a risk management
framework should document risk tolerance
the levels of risk taking that are
acceptable in order to achieve a
specific objective will manage a
category of risk risk appetite the level
of risk the organization is willing to
assume ensuring that the board
management and staff all understand the
scope for risk when making decisions and
the type of risks that the organization
is attempting to avoid mitigate transfer
or accept there are different types of
risk strategic risk operational risk
emerging and people risk and compliance
risk common tools use in the
identification and management of risks
include the risk management process risk
management policies and procedures risk
and control self assessment risk matrix
scenario planning and loss event
database the risk management process is
iterative which means that it is a
process of monitoring reviewing and
focusing on continuous improvement
developing a risk culture means creating
a workplace where staff has the
confidence to ask questions and to
challenge assumptions about the way that
business is can
that our vision is to champion whole of
organization governance and risk
management through education advocacy
and engagement with members and their
broader community contact us to find out
more about governance Institute and the
benefits of membership governance
Institute strengthening society through
governance excellence
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