Risk

Management
FINANCIAL MARKETS -
GROUP 6

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 Members

Laig, Abegail F. Marquez, Francine

Angela G.
Manigbas, Morel Lalunio, Lady Lhyn D.

GROUP 6
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 Introduction to risk management
Principles of risk management
Table of Risk management process
Contents Importance of risk management
(pro's and con's)
Types of business risk
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 RISK
MANAGEMENT

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 Risk Management
Risk Management is the process of measuring or
assessing risk and developing strategies to manage it.
It includes risk planning, assessing risk areas,
developing risk handling options, monitoring risks to
determine how risks have changed and documenting
overall risk management program.

RISK MANAGEMENT
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PRINCIPLES OF
RISK
MANAGEMENT

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 • Integration
Ensure that all of your
organization’s activities make
risk management a focus.
Integrate it throughout your
organization.

PRINCIPLES OF RISK MANAGEMENT

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2. Structured and Comprehensive
Risk management is structured
with guidelines and procedures
to follow in order to maintain
productivity and efficacy.

PRINCIPLES OF RISK MANAGEMENT

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 3. Customized

Risk management framework

and process is tailored to your
organization, the context in
which operates, and its
objectives.

PRINCIPLES OF RISK MANAGEMENT

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 4. Inclusive
Risk management is transparent;
it is easy to understand and doesn’t
include confusing jargon, allowing
stakeholders to be included in the
framework.
.

PRINCIPLES OF RISK MANAGEMENT

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5. Dynamic
Context and knowledge within an
organization change constantly and
should be acknowledged as they do.

PRINCIPLES OF RISK MANAGEMENT

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6. Uses best available information

All information must be timely

and accessible for stakeholders who
need it.

PRINCIPLES OF RISK MANAGEMENT

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7. Considers Human and Cultural
factors
Factors like these can
significantly impact risk
management, so you must
recognize this within your risk
management activities.

PRINCIPLES OF RISK MANAGEMENT

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8. Practice continual improvement

Improving continually through

experience ensures the
organization’s resiliency

PRINCIPLES OF RISK MANAGEMENT

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 Process of
Risk Management

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Establishing the Context
• Firm articulates its objectives
• Defines the external and internal parameters to
be taken into account when managing risk.
• Sets the scope and risk criteria for the remaining
process.

PROCESS OF RISK MANAGEMENT

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Risk identification
METHODS:
• Objective-based risk
• Scenario-based risk
• Taxanomy-based risk
• Common-risk checking

PROCESS OF RISK MANAGEMENT

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 Risk analysis
Risk assessment determines possible mishaps,
their likelihood and consequences, and the
tolerances for such events.
Two types of risk assessment::
• Qualitative assessment
• Quantitative assessment

PROCESS OF RISK MANAGEMENT

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Risk evaluation
Some of the key questions in risk evaluation are:

• What are acceptable levels of risk?

• What are intolerable levels of risk?
• Does the risk need treatment?
• What are the priorities for treatment
of risks?

PROCESS OF RISK MANAGEMENT

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Risk treatment
To effectively treat risks one needs to understand
how risks arise. Some of the ways that risks are treated
are:
• Avoid the risk
• Reduce the risk
• Share the risk
• Accept the risk
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Communication & Consultation
Good communication and consultation is
essential for risk management and attempts to:
• improve people's understanding of risks and the
risk management processes
• ensure all relevant stakeholders are heard
• ensure that everyone is clear on their roles and
responsibilities.

PROCESS OF RISK MANAGEMENT

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 Monitoring and review
Risk management is an ongoing process:
• the risk management process needs monitoring
• the effects of risk treatments need to be
monitored and reviewed to ensure they are
adequate and effective
• new risks need to be scanned for.

PROCESS OF RISK MANAGEMENT

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Summary:

PROCESS OF RISK MANAGEMENT

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Importance of

Risk Management
( PRO'S | CON'S )

Manigbas,Morel A.

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Risk Management

is beneficial to the following:

• Individuals inside the company

• Businesses
• Organizations

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Pro's of
Risk Management

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1. Increased Opportunity for Identifying
and Avoiding Risks

The first and most important advantage is that

clear risk management processes make it easier to
mitigate and avoid risk. By establishing processes to
identify risks early, companies are better able to react
successfully, before those risks become larger
problems.

PRO'S OF RISK MANAGEMENT

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2.More Accurate Project Projections
“Improved data quality is, without a doubt, a critical
component of various risk management advantages,”

- Jeff Mains, the CEO of Champions Leadership

Group

Identifying risk potential early on of the process has a

favorable influence on the budgeting process. It can help
you more accurately calculate a budget.

PRO'S OF RISK MANAGEMENT

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3.Earlier Identification of
At- Risk Projects

Risk management helps you spot the red flags

that are raised from the start from high-probability
risk events.It is easier to notice when a project is in
trouble if risk management practices are in place as
a standard process forcing the project team quickly
adopt to its possible and negative impact.

PRO'S OF RISK MANAGEMENT

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4. Ability to Grow and Evolve

Risk management processes improve as you

gather and react to risks over time. The more
experience your teams have with assessing and
controlling risks, the more effective they will be.

PRO'S OF RISK MANAGEMENT

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5.Increased Return on Investment (ROI)

It goes without saying that projects produce

better returns when they are completed on time and
on budget. Projects that encounter fewer risks are
more likely to stick closely to their original project
plans.

PRO'S OF RISK MANAGEMENT

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6.Increased Executive
Support for Initiatives

Project managers with proven track records for

avoiding and managing risks are more likely to
gain the trust and approval of their sponsors.

PRO'S OF RISK MANAGEMENT

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Con's of
Risk Management

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 • More Complexity Can Add More
Opportunities for Failure

In any situation, more complex processes can

increase the possibility for points of failure. When you
implement risk management practices, there is the
chance that those practices themselves can introduce
additional risks that must be managed as well.

CON'S OF RISK MANAGEMENT

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 2.Requires Strict Adherence
to Procedures

Risk management requires all employees to adhere to

the policies you put in place to function properly.

CON'S OF RISK MANAGEMENT

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 3.Impossible to Predict Everything

You can’t predict every risk event. You will spend

time and money anticipating risks that do not happen;
conversely, you will probably be faced with risks you
didn’t see coming.

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 4. Cost
Implementing risk management practices requires
time and money, which often must be routed away
from other business tasks. Also consider the cost of
any needed software or professional consultants, as
well as the residual cost of ongoing practices.

CON'S OF RISK MANAGEMENT

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Types of Business
Risk
Marquez, Francine Angela, G.

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• Financial Risk
Risk of not having enough money
to pay for goods or services needed
by the company.

TYPES OF BUSINESS RISK

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2. Reputational Risk
Reputational risk refers to the
damage that could be done to an
organization's reputation.

TYPES OF BUSINESS RISK

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3. Operational Risk
Operational risk is another major concern
for companies. It refers to the possibility of
something going wrong during normal
operations.

TYPES OF BUSINESS RISK

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4. Legal Risk
Legal or compliance risk is related to the
legal consequences associated with operating
a business. These include things such as
lawsuits, fines, and penalties.

TYPES OF BUSINESS RISK

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5. Environmental Risk
Environmental risk pertains to anything
related to environmental compliance. Examples
include natural disasters, pollution, waste
disposal, and hazardous materials

TYPES OF BUSINESS RISK

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6. Political Risk
Political risk is the risk of political instability
in your country or region. This could lead to
changes in government regulations, which could
impact your business

TYPES OF BUSINESS RISK

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7. Social Risk
Social risk refers to any risks that arise from
interacting with society. These risks may be
caused by discrimination, harassment, or
violence.

TYPES OF BUSINESS RISK

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8. Ethical Risk
Ethical risk is defined as the potential loss of
trust among stakeholders. The most common
examples of ethical risk involve fraud,
embezzlement, bribery, corruption, and insider
trading.

TYPES OF BUSINESS RISK

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9. Organizational Risk
Organizational risk is the risk of an
organization failing. It includes poor leadership,
ineffective communication, and a lack of
cooperation within the organization.

TYPES OF BUSINESS RISK

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10. Cultural Risk
Involves the effects of cultural diversity
on a group of people. Some examples of
cultural risk include racism, sexism,
homophobia, xenophobia, etc.

TYPES OF BUSINESS RISK

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Thank you very much!!!!

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