UNIT HT INTRODUCTION T0 RISK MANAGEMENT. Chapter 11 Risk Management 12. Practical Insights in Reducing and Managing Business Risks Chapter (i) RISK MANAGEMENT ‘Expected Learning Outcomes [Ate studying he chaper, you shouldbe able to, Defne ek management Esplin ety te base princes of rk management Describe he elamants of ek managemant ato he relvant ik teminlgis. Ceeribo the pte! teatmarts er approaches in managing Ean te areas ofk management Deserve the sleps in the risk management process Fomiaze yours wih he SEC equeementsin dealing with fe mde ek management woosCHAPTER 11 RISK MANAGEMENT axTRoDUcTION [ecive carte goers cama be aie wit te eranzion| -asteing the ao kmanagament And ik azn ghee 3 Soe ‘mos import emperor ets eer: ‘he lees of fced by bens ane seed ene f the st ‘ngs crate see's san there te comple wih ep reiemen op-anapenet shoal comidr lop bolle 015k RISK MANAGEMENT DEFINED REPRE ise aces of esrig at engl nd dvelning Sracpesto managed Rk aaroprsnt sa jstewsc apo nel Savana cooling sco rons wih pl cong need hang, Rk management 1 the atv pace of oligo ce "i plowing, sesing hens eon hela pn, meng ‘ih termine fa rs te shnged a docmeting. eal Fak smungement progam eden 30 3100 it Magen be ene sacsne, al pon of ake ‘stowed courted md ecm patos ef enue hrs py nena of ns Ce a aca mene a a ta fo nae me re ep sem tl ins nd dase chs et ut Maren 68 [BASIC PRINCIPLES OF RISK MANAGEMENT Te Ine! Oration of Stanton (ISO) Hetifies the bse icine rk maagemet isk management shoul : 1. crate ate — esos pent to meth soul he ess ha the Sneqeteoflnacion ete ens stu eee he cos nes nein apes ‘enna arf hepa proce dson-ahing te dbname tampa and pone to hangs ret asl fitment nd enkoeement comeing, ‘heal man suman ore 6 Re spsunati amet cainalh pri masse) [PROCESS OF RISK MANAGEMENT 2 a ‘Accoding 10 te Sambar ISO 3109 “Risk agement — Prices and {Gels ov Implemeton “be pron of ae ansgemen cea of Svea eps alos 1 iinet cat Tine 1 Wertman ai emit ert Ping be oun pa Mypage ning cl fk memet {lees debonair 4 betaag 4 tome fre shy ad a adh ete ce. Devtyngan ass inal pn. Nios is win hha enn mtgMW Ore tt asees== 1 with he 2 Metin of eet ish ideieion cm ‘Sus tthe sure of pte or nah Be aah o HE FONE feat Common a enticono mead 1 Oseshetust Scere 4 Common cbeshing f Riketarng ‘ldksucamest One rs hve Sen eid etl svi Sf tmpet an the potblinf ecurene mat fe seed, THe Ssssument pecs ei Wo mle De ber edd Cen in Fossang be mplenensca tek agers, ELEMENTS OF RISK MANAGEMENT nr. proves of aesig cel ls ca ice an asing Seen Sahm mn ot cece hen te nitinded. nl i magne ll meine spon oF ‘eater robe rcicet ant hae tine minions etn = eee ee foyer ropa of ascent mtd sol otf he 1. ideation, careceaaton an assment of tres 2% ssesiner eft wuaeabily fcr aes esp hens 3. eminaon of tek be. te ‘pei pe of mks onpee et) ee osm 4 asinine way trade os ss son offi edsion metres on egy [RELEVANT RISK TERMINOLOGIES ‘loka Asocated With investments Although ase rk pena ma compensate he inet al Greeuing ssc the meron. names sts, ‘cori to mesma weeny Te fcr way eonsicered ‘ipso investment ae ies fk 2 Fameial it 7 igi vk Set 1 pursing perch ‘usiess ise RRP refers weeny abe ie ate fret cused Germ ef he busines Tee mos feqeny dacued cases of ‘ies hte una stowthe fs sles and epering ‘Speen Clay he fale ae or grated and will Race ‘Shescony fn othe ate of nas changes. A firs Itcome a la os opag expenses al operating egies Sehale hen se oly wl be pase ey epeting ‘ram Mos fewest ve fed eng vs ‘mpi eyecare srs). These fad expense ene the Seay bene wo be morsels ban le, Busnes rok rele SEEDS Citiy ws neste opting leverage of ie fem ened 1 Tae operung pers DEFAULT RISK ta is ened oh pai sone al of iil Petit wt ant ence Te ese of fk hy sete tance cmp teed eee Fan chums eo dso the event of de Eee mes bnkopy ser, cen cing PERRY (SS nae rir the cin of ody gut SSieolenFMANCALRSK ‘es capi sce os cing eerie (Rid ire meso Fane en ay al peng ieee is oto meal eeu i IF A fms amy aces me et ripe sre tes a re dd PE {Sect vay orig ae The econ Stina cogs enh i een ad Selb Senter nome sess iv shied erty. ABest teow! ries pps wenden riot re rege nrenesr RATE ise ‘ecae mney hs time salu, Mtn ae aes wil cate ‘he ale of mest shat Ah weeineih moves sng ate "es cave tod pes elie ad desnig met esate bod ees fis Movements ice rer afer ins veined Sematns. 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Beewse hey af eon xine tal acne mater ety sas fa bold quickly Some ely out hares homeve hve ger Tui htm esata ase Ain mae ose hen fhe eave ew tres unig sear dig ere Titel Te ie mae eae pe ead (he lence ‘nen he i pce yer iin fy ah ok pe Seles ne wlio acet Ale pea eres cos ang oe frvestr and thes repre Illy rk vests orieig he orcas f gid meses ec hat ave no ea) MEL oF Fequie pice sncnsom wil demand 3 rte of em at Comper fore iy Mannose sk wis ‘ty fete nel byenary ie aiden feo pede! onan and pocien webs {Gennes a an ig (nner) 0 aster inne scsi ov seeatondcme cecs mae by te tangent ofc ev my ccd hk Be ls Sercoopr nur PurcHAin powaR ak ‘resigns pros. mre dl in scope han he Uherbperstea tivenyt cere te deine nie ie of ck GP tants often mire ili to recognise dat he pune flwer ah rtm youve sae eset hat des {Giemsa reste atin fio sport remember at Snes ec omen Bing osmgion ny TEN mv a pooseoomated ts cha i {Tso ils rss ous tng sl of ition. the ea EN et af cum i estan he nomial Sted eee ten efcioe eds the pring power of he So nesetone —__——— Ris seated With Manafctarng, Trang nd Serve Consent Comply 8 Ondecene 2 Resechand Development © Paton 2 Balney st Worcs 8. Options Rik 2 ean Sty 12 ter Stes Seve ate 1 Teenie Obaecense Since 1 Manapaner Fre © Employee Fo ©. Pai Risk 2 Fevan Corey Liu ovata Regular Charge Pate! Regulatory adept ‘ShorescrRelos Gra Rance Copal Avthity eae ergs Pk Moasomet 1 Rsk acociated ith nana inatittone Tae rast rare 7 Bend SW a Suen 3 cutee + maar fey =e Eines 7 ‘2 hanan Resse Ed ga 5 ‘esp = Fagin ea cana Aa = Gargione Shingo SES ae = Ener Band a EP 3 Pouce eee 3 Natl + Patio Eurex [2 We = Det ak oe. = envi ami _| = yt — ours = Testes re = Faaioa ga 2 Fanon ratoa St Sites onl12 Oye ee POTENTIAL RISK TREATMENTS. tne bee Heid ad ase 50 31000 ao spas ta one tne te Se Iecnige tsmnnge evs ba ‘vcore fe fr cgori Stree sk avidmce “hinder iris si An cx wot ‘Snot ining oper re rear ake on he a ay Aha comes th Avg nk hoever a es iO the tena pi ht sept (einige rk ray oe tioned. No ‘merog a hse avid he i los abo ava te pos of ik Recon isk edtion a optinztin oles edie he set a he ator # ‘Opting rts esas fading 9 ‘une tween he neue a feb ths opratn este tnd feween rd eden and elon appl Ong eo be on ‘Sample fi reduction 8 oarorer an notary (fk Seving hg met ih pte eo oe is sion aes mse Stun fom ash when ‘oxi imran a tamale hs en. Al ist em adel 2 tae ori y Ai ay meat poe soot ined eed ik Ths cee ‘lg ss seal orth com one fr gee ‘boll aroun tat ead ide pl occa MERE ok Moet [AREAS OF RISK MANAGEMENT. ‘Asaplic corporate race, mangenent ithe ena fo evs Irotering sod contig he farce operational ik on fs Slee “The Basel I famewo res hs in mare ik pre) eet ik and ‘perso! i nd so Speen mete or aeng Spi reine (reach tee conponens ‘Themos commonly ecuador frit mangement Eerie ik management Rik maragenet sce sped poet management Risk management or Repeats Ris mangement of sfomaton etna isk management chien pre en ar 3+ [A sinpliied framework for a8 Eaters Rk Management Proce protegeche ‘SEC Requirement Reine to Enterpie fsk Mangement of Ta Usted Corpor S£C Cae of Governance Renmei 2a coreg oan Froude flowing The So et oe at» sr nein hme forever, mont a 8 OH Beste va Th nk manoemet font sa ge Baa ‘tigers a ee EI MEE tect mh magne toe st anager ply i pot an para opens cpa ay. ‘he Bas spade feta Be cogs oh HO md ong ov chk spe pss pees Principle 12 which dae wih svengning the Ina Coma Sse ad Exe Rist Management Frome sates hat ‘Tors tee, rowpuey od poe enc Ye cot of afar canny shu have 2 seg asec n ae ‘Sslen a rep ak mrapmet ane RISK SIANAGEMENT FRAMEWORK Ti Bo dhl vet a sed ene ik spn (RM) faneno nn plo ence mac as ed mae tetris he 1k sargrten fan shad pie Bre ‘Sesbing mst io eae ep sos Sete w a commons se, pile nd conplesty of epentons,he tat eh a Ra veh Com RO fat ld rspusble fr he veteh a3 company ae anigeneo sytem to emure i incionsty a afc Pa baes eal comp et ee mer ie mete heat Galan ft Bad oof ay ter comiee A ee Somme mis tne Yan tanh bn ie ‘alranagent| esa exper rkad We eee ‘Sajet ts sik profile and compe of operons, he company sold Saveaseprterikmonogenet fonlon nt ses a mana bk ‘pores, STEPS INTHE RISK MANAGEMENT PROCESS ‘To erhonce_managene’s compete in tee oversight role on risk psgaee be folawing steps eflond 1. Setup separate ik mangement commitesehaied by 2 boar ‘+ Creion of rh maigenet commie as toad {porate th fim cometonent to alot a8 steed ‘Simpy wie ek management sem 12 Ensue ht eal compres rk masgemen ste in ple. + This fly doeamentd fa ste wil provide 3 vison ote tots Geom tan efthe.compenyevie ik ‘tage as el navamsa the ketal and ‘heal tbe canpey os 3. Assess whet femal stem posite neces mens +The hey elements ht the conpanynie eh mangement sue shu pos re 2 ulsand jeans 3) Riles ©) orpminien secre (2 erik management process ocumention 1 Te ih erin sete sould nae formal carer, [Cetorshoratoneoring nex do destin “+ Therh magonent procs shlnlde the folowing ses 21" Aeomant ener, Determination of tet 1) Developme an plan Reda aod ei, ane ©) Taploneston faction ps ‘3, Nontong and epetngk management perfomance, 1) Comoe improvement ik management epi,he eset the Sep i “Montini done by tl seca pares sich 28 ser 4 rf the ecm fhe varie: mpm vias aed yh ne + Risk sssment sep win as ss sein a An indpenn over can ao be api 1 vai ‘Iteraon oe somes od eseen repreet IM coos ‘and fr a et ot pee. Ths ep ered ty rerpnable nana te tans ofc, duction a song’ mareing monger Shan ev EST Se tt et ci ne ie a oo '+ These should be an open communication channel 10 ensure that neler ie het a it et ti wes ese a» Ti 5. Asses if management as eelped an pee he table sk xs zo a tong, way towards attaining the company’s Fish management ies ee = 1: sap ta el hmm + lat aed ce i ad = rererees ae eee Feedeack methodologies and systems ne = 10. Hire experts when necded. + Sraeier may image moins, tefiton tae, fspottos nd ten fis 4 rae magnet eee ion ek geen + Diets st comin mostra se f mange ‘aster inplenertig dese sk maopeent capac 1+ Rik mnagonet isis nde paces, ppl repo sie, ot eget at Tie onsen i Stet aetan cine 2 ee : 7 Asse mangement efeas 10 moniker oven compas ik sen Fermin nd ioe com ft + iA ances pmane met te mdm rts tind oreo ot ah at Socks tte inne wae cong ey wnt tr8 Che REVIEW QUESTIONS Operon ih manifene nl ee allowing vent 2 eet tes ol neve Proce sopaee 2 haste apna in mahi 3, Ho dS0 3108 de“ Maer? 4 ace eb ces men 6 Wate sme i mage pe? 1 Wistar ee cme a campy ie i ment Showin Mati Che esas 1. 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