RISK MANAGEMENT

PROCESS

DAY FIVE
OCTOBER 2020 ERM WORKSHOP - SBS GROUP 1
RISK
ANALYSIS
 root cause and sources of risk
 consequences of risk event
 likelihood that those consequences
will occur

OCTOBER 2020 ERM WORKSHOP - SBS GROUP 2

 Criteria must be
established against which
potential risk outcomes
and their effect on
business objectives can be
assessed.
Impact – reflects a
measure of the size of
potential risk outcomes,
ASSESSM
should a risk event occur
ENT RISK
CRITERIA
Traditionally, 2 criteria:
Likelihood – reflects an
estimate of the possibility
that risk events will occur
and result in the assessed
risk outcomes

OCTOBER 2020 ERM WORKSHOP - SBS GROUP 3

CAPABILITY CRITERIA
Capability criteria exist based on the organization’s ability to manage risks.
Readiness and preparedness
Agility
Resilience – ability to withstand the outcomes of specific events
Controllability
Ability to adequately and timely monitor
Maturity – organization’s overall risk management experience and expertise
Degree of confidence

OCTOBER 2020 ERM WORKSHOP - SBS GROUP 4

GOVERNANCE RISK
CRITERIA
Risk Capacity – relates to the organization’s total capability to absorb
negative outcomes
Risk Attitude – the organization’s cultural mindset with regard to
risk; reflects an organization’s propensity to take on risk
Risk Appetite – the type and total amount of risk an organization is
willing to take on in pursuit of its objectives
Risk tolerance – the risk-taking boundaries within which managers
and employees are expected to perform in pursuit of the
organization’s strategic, operations, reporting and compliance
objectives

OCTOBER 2020 ERM WORKSHOP - SBS GROUP 5

RISK ANALYSIS

*Probability measured over a one-year time horizon

OCTOBER 2020 ERM WORKSHOP - SBS GROUP 6

RISK
EVALUATION

 Evaluate risk events as to

likelihood and impact using a
common risk rating scale

 Identify which risks are high

risks, moderate and low risks
after mapping them on a risk
map

7
OCTOBER 2020 ERM WORKSHOP - SBS GROUP 7
RISK ANALYSIS CRITERIA –
ADDITIONAL EXAMPLES
PROBABILITY/LIKELIHOOD

OCTOBER 2020 ERM WORKSHOP - SBS GROUP 8

RISK ANALYSIS CRITERIA –
ADDITIONAL EXAMPLES
IMPACT

OCTOBER 2020 ERM WORKSHOP - SBS GROUP 9

RISK PROFILE - DEFINED
• Consolidated view of a set of risks that
shows the impact and probability of
each risk.
• Basis for identifying and evaluating
events that could positively or
negatively affect the achievement of
business objectives.
• Enables organizations to obtain a view
of events, internal and external,
retrospective, and forward-looking, to
which they may be exposed.

OCTOBER 2020 ERM WORKSHOP - SBS GROUP 10

SAMPLE RISK MATRIX

OCTOBER 2020 ERM WORKSHOP - SBS GROUP 11

RISK PRIORITY RATING
SAMPLE

OCTOBER 2020 ERM WORKSHOP - SBS GROUP 12

RISK ANALYSIS GRID

OCTOBER 2020 ERM WORKSHOP - SBS GROUP 13

 ACTIVITY SIX Risk analysis and Assessment

ERM WORKSHOP - AFPMBAI 14

ACTIVITY 6: RISK ANALYSIS
AND ASSESSMENT

• Using the results from Activity 5:

• Define the risks criteria to be used
• Plot these risks in a risk matrix for the program assigned to you
• Present your risk heat map to the group
• Debrief