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Ch.2 Part 3

The document discusses risk management and outlines categories of risks, the risk management process, qualitative and quantitative risk analysis methods, defining likelihood and consequences, analyzing likelihood and consequences, evaluating likelihood and consequences, priority criteria, risk mitigation strategies, and sources of mitigation strategies.

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Alzcareen Erie Liwayan
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23 views25 pages

Ch.2 Part 3

The document discusses risk management and outlines categories of risks, the risk management process, qualitative and quantitative risk analysis methods, defining likelihood and consequences, analyzing likelihood and consequences, evaluating likelihood and consequences, priority criteria, risk mitigation strategies, and sources of mitigation strategies.

Uploaded by

Alzcareen Erie Liwayan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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CHAPTER 2

Risk Management: A Powerful Tool, Part 3


Categories of Risks
Financial Strategic
 Reduction in funding  Engages in activity at
 Failure to safeguard assets variance with its stated
 Poor cash flow objectives
management  Fails to engage in an activity
 Lack of value for money that would support its
stated objectives
 Fraud/theft
 Poor budgeting
Operational Reputational
 Failure of an IT system  Poor stakeholder relations
 Poor quality of services
delivered
 Lack of succession planning
 Health & Safety Risks
 Staff skill levels
Governance and Compliance
 Lack of oversight by Board
 Segregation of duties not
defined formally
 Ensuring compliance with
funder’s terms and
conditions
 Compliance with applicable
legislation
Risk Management Process
Risk Management Process is the systematic
application of management policies, procedures
and practices to the tasks of identifying,
analyzing, evaluating, treating and monitoring
risk.

AS/NZS 4360-Risk Management Standard


Aims and goals:
What are your intents and objectives?
What does your business exists for?
What are your services or deliverables?
Who are your affiliates, patrons and
clienteles?
Process:
Establish the Context
Identify Risks
Analyze and Evaluate Risks
Develop Risk Treatment Strategies
Monitor and Review
Qualitative & Quantitative Risk Analysis

Qualitative Risk Analysis


1. Assess impact and likelihood of the
identified risk
2. Probability and impact matrix
3. Risk categorization
4. Risk urgency assessment
Quantitative Risk Analysis
1. Data gathering
a. Direct
b. Diagrammatic
c. Delphi
2. Probability distribution
3. Modelling technique
a. Decision -tree analysis
b. Sensitivity analysis
c. Expert judgment
1. A clear understanding of organization’s goals.

2. A clear understanding of the likelihood of something


happening.

3. A clear understanding of the consequences of something


happening.

4. A form of matrix that combines the likelihood and


consequences and arrive at a risk rating which allows the
separation of acceptable from unacceptable risks.
Identify the Risks Identify the
outcomes
• Risks strikes-so what?
• What can possibility
happen? • What is the after -
effect?
• What is/are the
consequences?
Risk Control
1. A prevailing management policy
2. Work procedure and practices
3. Technical system
4. Training program
5. Contract management planning
guidelines
Defining Likelihood and Consequence

The consequence and likelihood matrix


i to ascertain what represents an
s
“Almost Certain” and what established
a “Rare”, when i a magnitude rated
“Significant” ands which ones are
considered a “Catastrophic” .
Analyzing Likelihood/Consequence
for Risk Rating
Risk analysis is about:
a. Determining the likelihood of events
b. The magnitude of their consequences
c. The mitigating factors that would:
- Reduce the nature
- Frequency
- Damaging effects of the consequence
Evaluating likelihood and consequences:
 How prone is this risk to occur?
 What will be the consequences in case it
does happen?
 By and large, what will be the overall risk
level?
 Is the risk Acceptable or Unacceptable
Priority Criteria
 Grievance to injury and
casualty aftermaths
 Damage to persona,
reputation, and
integrity
 Damage to private
property
 Damage to structural
resources
 Environmental damage
Risk Mitigation
Risk Mitigation Strategy Options
1. Risk Avoidance
2. Risk Transfer
3. Risk Reduction
Strategy Sources
 Communication
 Training
 Documentation
 Resourcing
 Systems
 Planning
Schemes and line attack
a. Communication
b. Training
c. Documentation
d. Action Plan

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