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Good management practice
Process steps that enable improvementin decision making
A logical and systematic approach
Identifying opportunities Avoiding or minimising losses
What is Risk Management?What is Risk Management?
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Risk Management is the name givento a logical and systematic methodof identifying, analysing, treatingand monitoring the risks involved in
any activity or process.
What is Risk Management?What is Risk Management?
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The Risk Management
process steps are ageneric guide forany organisation,regardless of the
type of business,activity or function.
How is Risk Management used?How is Risk Management used?
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There are
77 stepsin the RMprocess
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The basic process steps are:
Establish the context
Identify the risks
Analyse the risks
Evaluate the risks
Treat the risks
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Risk is dynamic and subject to constantchange, so the process includescontinuing:
Communication & consultation
Monitoring and review
and
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The Risk Management process:
The strategic and organisational context
in which risk management will takeplace.
For example, the nature of yourbusiness, the risks inherent in your
business and your priorities.
Communicate & consult
Establish the context
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The Risk Management process:
Communicate & consultMonitor and review
Defining types of risk, for instance,S
trategic risks to the goals andobjectives of the organisation.
Identifying the stakeholders, (i.e.,whois involved or affected).
Past events, future developments.
Identify the risks
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The Risk Management process:
Communicate & consultMonitor and review
Analyse the risks
How likely is the risk event to happen?
(Probability and frequency?)
What would be the impact, cost orconsequences of that event occurring?(Economic, political, social?)
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The Risk Management process:
Communicate & consultMonitor and review
Evaluate the risks
Rank the risks according to
management priorities, by riskcategory and rated by likelihood andpossible cost or consequence.
Determine inherent levels of risk.
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The Risk Management process:
Treat the risks
Develop and implement a plan with specific
counter-measures to address theidentified risks.
Consider:
Priorities (Strategic and operational)
Resources (human, financial and technical)
Risk acceptance, (i.e., low risks)
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The Risk Management process:
Document your risk management plan anddescribe the reasons behind selecting therisk and for the treatment chosen.
Record allocated responsibilities, monitoringor evaluation processes, and assumptions on
residual risk.
Communicate & consultMonitor and review
Treat the risks
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The Risk Management process:
Risk Managers must monitor activities andprocesses to determine the accuracy ofplanning assumptions and the effectivenessof the measures taken to treat the risk.
Methods can include data evaluation,
audit, compliance measurement.
Communicate & consult
Monitor and review
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The Risk Management process:
Establish the context
Identify the risks
Analyse the risks
Evaluate the risks
Treat the risks