RISK MANAGEMENT PROCESS

1. What is Risk Management?

Every business faces risks or risk factors, and those risks need to be identified, analyzed and
responded too.

Effective risk management, means setting up controls that will proactively minimize the negative
impact of future outcomes.

2. What is Credit risk Management?

3. Risk Management Structures.

A proper Risk management structure should not only point out the risks facing the business but
should equally be able to calculate the uncertainties and predict their impact on the business. Risk
management structures must follow the set-up risk tolerance levels of the business.

4. Risk Identification
You identify risk by understanding the organization core business and the potential areas of
risks.

5. Risk Analysis
Risk analysis is a qualitative problem-solving approach/ methodology.

6. Risk Response / Control

Avoidance: A business strives to avoid a particular risk by getting rid of its cause (root cause
analysis).
Mitigation: Minimizing the projected financial impact associated with a particular risk by
reducing the possibility of its occurrence.
Acceptance: To accept a risk. This option is possible if a business entity has developed robust
contingencies to mitigate the impact of a particular risk should it occur.

7. Preventive mechanisms for identified risks

the ideas that were found to be useful in mitigating risks are developed into a number of
contingency plans that can be deployed in the future.