Fundamental of

Risk
Management
 Learning Outcomes
Ø Concepts and Processes:
• Risk Concept
• Risk Process
• Risk Awareness
• Risk Measurement
• Risk control
• Risk Is a Bell Curve

Fundamental of Risk Management | Cyberlynx International College

 Risk management is the process
of identifying, assessing and controlling
Risk Concept threats to an organization's capital and
earnings.

These threats, or risks, could stem from a

wide variety of sources, including financial
uncertainty, legal liabilities, strategic
management errors, accidents and natural
disasters.

Fundamental of Risk Management | Cyberlynx International College

Importance • creates a safe and secure work environment for all staff
/Benefit of and customers.

Risk • Increases the stability of business operations while also

decreasing legal liability.
Management • Provides protection from events that are detrimental to
both the company and the environment.
• Protects all involved people and assets from potential
harm.
• Helps establish the organization's insurance needs in order
to save on unnecessary premiums.

Fundamental of Risk Management | Cyberlynx International College

 Risk management strategies
and processes
All risk management plans follow the same steps that
combine to make up the overall risk management
process:

Ø Establish context
Ø Risk identification.
Ø Risk analysis
Ø Risk assessment and evaluation.
Ø Risk mitigation
Ø Risk monitoring.
Ø Communicate and consult

Fundamental of Risk Management | Cyberlynx International College

Risk
management
Process

Fundamental of Risk Management | Cyberlynx International College

Risk
management
stages

Fundamental of Risk Management | Cyberlynx International College

Risk Awareness

Fundamental of Risk Management | Cyberlynx International College

 Risk Measures

Risk measures are statistical measures that are

historical predictors of investment risk and volatility.

Risk measures are also major components in modern

portfolio theory (MPT), a standard financial
methodology for assessing investment performance.

The five principal risk measures include the alpha,

beta, R-squared, standard deviation, and Sharpe
ratio.

Fundamental of Risk Management | Cyberlynx International College

Risk Control
Cycle

Fundamental of Risk Management | Cyberlynx International College

 • Risk control is the set of
methods by which firms
evaluate potential losses and
take action to reduce or
eliminate such threats. It is a

Risk Control
technique that utilizes findings
from risk assessments.
• The goal is to identify and
reduce potential risk factors in a
company's operations, such as
technical and non-technical
aspects of the business,
financial policies and other
issues that may affect the well-
being of the firm.
• Risk control methods include
avoidance, loss prevention, loss
reduction, separation,
duplication, and diversification.

Fundamental of Risk Management | Cyberlynx International College

Risk Control
Risk Measure
Control

Fundamental of Risk Management | Cyberlynx International College

Risk is a bell
curve

Fundamental of Risk Management | Cyberlynx International College

 Source
Lam, James., 2nd Ed., 2014. “Enterprise Risk
Management : From Incentives to Controls”,
John Wiley & Sons Inc.

Louisot, Jean-Paul, Ketcham, Christopher H.,

2014. “Enterprise Risk Management : Issues and
Cases”, John Wiley & Sons Inc.

Fundamental of Risk Management | Cyberlynx International College

Thank You
Manimegalai Rajenderan
Lecturer
Business Administration

Cyberlynx International Sdn Bhd (584722-A)

No. 27, Jalan Ru 7/1, Section 7
46050 Petaling Jaya, Selangor Darul Ehsan
T: +603 7932 5454 | F: +603 7932 1414
E: manimegalai@cyberlynx.edu.my| W: www.cyberlynx.edu.my