Risk Management in 2020

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Curriculum

About Course

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Risk Management

Generally, everyone has some general understanding of the meaning of the word 'risk'. As children, we are taught that something is risky, or we are told not to take risks. But what exactly is 'a risk'? In fact, we all take risks every day quite happily. We do things knowing that there is a risk involved. For example, we know that there is a risk involved in driving a car or riding a bike. We accept the level of risk because in…
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Risk Management

Generally, everyone has some general understanding of the meaning of the word 'risk'. As children, we are taught that something is risky, or we are told not to take risks. But what exactly is 'a risk'? In fact, we all take risks every day quite happily. We do things knowing that there is a risk involved. For example, we know that there is a risk involved in driving a car or riding a bike. We accept the level of risk because in our minds, although the potential consequences can be death or serious injury, we think that if we are careful, the chances of something dreadful happening is very low.

THE CONCEPT OF RISK

It is the probability or threat of damage, injury, liability, loss, or other negative occurrences that is caused by external or internal vulnerabilities, and that may be neutralized through pre-emptive action. Risk arises out of uncertainty. Thus risks are uncertain future events that could influence the achievement of objectives. In a way, we can say the risk is the exposure to the possibility of such things as economic or financial loss or gain, physical damage, injury or delay, as a consequence of pursuing a particular course of action. If you run a school or teach, there are many factors to take into account, for example, the safety of teachers and scholars, the satisfaction of parents and children on the service delivered, compliance to legislation and Department of Education directives, the financial viability of the school. The concept of risk has two elements, the likelihood of something happening and the consequences if it happens. Risk can arise from internal or external sources and might include exposure to such things as economic or financial loss or gain, physical damage, failure of a project to reach its objectives, client dissatisfaction, unfavorable publicity, a threat to the physical safety or breach of security, mismanagement, failure of equipment and fraud. Risk management is as much about identifying opportunities as avoiding or mitigating losses. It is a logical and systematic process of establishing the context, identifying, analyzing, evaluating, treating, monitoring and communicating risks associated with any activity, function or process, in a way that enables an organisation to minimize losses and maximize opportunities. There is no such thing as a risk-free environment, but many risks can be avoided, reduced, or eliminated through good risk management. Good risk management also takes advantage of opportunities while analyzing and dealing with risk. Good risk management is forward-looking and helps to improve decisions. It is not just about avoiding or minimizing losses, but about dealing positively with opportunities. It is a powerful tool for managers. Good risk management is based on a well-planned, logical, comprehensive, and documented strategy.  This strategy provides general policy guidance, and plans and procedures that can be used as part of the organisation’s everyday work to manage risk. The complexity and extent of the strategy should be commensurate with:
  • The level of risks (i.e. The likelihood and consequence of each risk) to which the organisation is exposed
  • The frequency and magnitude of risks.
Good risk management must be based on a strategy, but a strategy itself doesn’t manage risks. Leadership, an effort by all levels of management and staff, and careful monitoring by boards and audit committees are needed to make the strategy a success.   Risk management process In order to manage risks, a risk management process must be followed. This process includes the following key steps. 1. Identifying Risks The risk assessment process begins with the identification of risk categories. An organization most likely will have several risk categories to analyze and identify risks that are specific to the organization. 2. Risk assessment Once the risks have been identified, they are then assessed on their likelihood of occurrence and the impact. This process can be simple as in case of assessment of tangible risks and difficult like in the assessment of intangible risks. This assessment is more or less a guessing game and the best-educated guess decides the success of the plan. 3. Risk planning Once the risk areas are identified and analyzed, the next step is to eliminate, reduce, or transfer the risk.  That is, a way of dealing with each risk is identified and implemented. The output of risk planning is a risk management plan. 4. Risk monitoring A risk management plan can never be perfect. Critical evaluation of a risk management plan at every stage of implementation is very necessary, especially at an early stage. It will allow you to discover the flaws before it gets into the action.

In Conclusion

Risks should not necessarily be avoided. If managed effectively, they allow us to seize opportunities for improving services and practices. Remember the old adage “nothing ventured, nothing gained”, ‘No pain, no gain ‘could actually be “nothing ventured, sure to lose”. In summary, where there is a risk, there is an opportunity and No risk, no reward. [caption id="attachment_743" align="aligncenter" width="200"]Risk Management Creatividad Consulting - Risk Management[/caption]

What Will You Learn?

  • When you finish this course, you will be capable of:
  • • Demonstrating an understanding of business processes and potential risks to a unit.
  • • Identifying potential risks and assessing the impact thereof in a unit.
  • • Developing contingency plans for managing risk.
  • • Testing and revising contingency plans.

About the instructor

Course Curriculum

1. UNDERSTANDING RISK
On completion of this section you will be able to: * The concept of risk is explained with reference to accepted theory and practice. * The factors that could constitute risks to a unit are identified and explained. * The role of organisational policies and procedures are explained in relation to risk management. Generally everyone has some general understanding of the meaning of the word 'risk'. As children we are taught that something is risky, or we are told not to take risks. But what exactly is 'a risk'? In fact we all take risks everyday quite happily. We do things knowingly that there is a risk involved. For example, we know that there is a risk involved in driving a car, or riding a bike, or going on a skiing holiday. We accept the level of risk because in our minds, although the potential consequences can be death or serious injury, we think that if we are careful, the chances of something dreadful happening is very low.

  • Introduction
  • My Understanding of Risk
  • Risks I deal with

1.1 FACTORS THAT CAN CONSTITUTE RISKS
In any unit there are different types of risk. Risks tend to vary from business to business but there are some risks most businesses have in common. As well as listing the risks, it's also useful to list what the consequences could be if the risks actually happen.

  • 1.1.1 Compliance Risks
    5:21
  • 1.1.2 Financial Risks
  • Financial Risks
  • 1.1.3 Operational Risks
  • Operational Risk
  • 1.1.4 Health and Safety Risks
  • Health Safety Risks
  • 1.1.5 Environmental Risks
  • Environmental Risks

1.2 ORGANISATIONAL POLICIES AND PROCEDURES
Policies and Procedures are the strategic link between the Company's Vision and its day-to-day operations. ut why is that so important? It's because well written policies & procedures allow employees to understand their roles and responsibilities within predefined limits. Basically, policies & procedures allow management to guide operations without constant management intervention. This in a ways helps in the management of risks. In most instance, if employees follow policies and procedures, risks are bound to be managed. Policy A "Policy" is a predetermined course of action which is established to provide a guide toward accepted business strategies and objectives. In other words, it is a direct link between an organization's "Vision" and their day-to-day operations. Policies identify the key activities and provide a general strategy to decision-makers on how to handle issues as they arise. This is accomplished by providing the reader with limits and a choice of alternatives that can be used to "guide" their decision making process as they attempt to overcome problems. In summary a policy; • Are general in nature. • Identify company rules. • Explain why they exist. • Tells when the rule applies • Describes who it covers. • Shows how the rule is enforcement • Describes the consequences • Are normally described using simple sentences & paragraphs. Procedures The ultimate goal of every procedure is to provide the reader with a clear and easily understood plan of action required to carry out or implement a policy. A well written procedure will also help eliminate common misunderstandings by identifying job responsibilities and establishing boundaries for the job holders. Good procedures actually allow managers to control events in advance and prevent the organization (and employees) from making costly mistakes. In summary procedures; • Identify specific actions. • Explain when to take actions • Describes alternatives. • Shows emergency procedures. • Includes warning & cautions. • Gives examples. • Shows how to complete forms. • Are normally written using an outline format. Examples of policies and procedures in business

  • 1.2.1 Health and Safety Policy
  • 1.2.2 Financial Policy

2. RISK IDENTIFICATION AND ASSESSMENT
On completion of this section you will be able to: * Potential risk factors for critical processes in a unit are identified and documented. * Possible scenarios that could constitute a risk are identified and documented. * The possibility of each scenario occurring is evaluated and recorded for future use. * An analysis is performed and documented to rate the impact of each scenario on a unit. * Priorities resulting from the impact analysis are determined and documented for implementation in the event of the risk materialising. There are several bodies that lay down the principles and guidelines for the process of risk management. The steps involved remain the same more or less. There are small variations involved in the cycle in different kinds of risk. The risks involved, for example, in project management are different in comparison to the risks involved finance. This accounts for certain changes in the entire risk management process. However the ISO has laid down certain steps for the process and it is almost universally applicable to all kinds of risk. The guidelines can be applied throughout the life of any organization and a wide range of activities, including strategies and decisions, operations, processes, functions, projects, products, services and assets. As per ISO 31000 (Risk Management - Principles and Guidelines on Implementation), risk management process consists of the following steps and sub-steps: * Establishing the Context * Identification * Assessment

  • 2.1 Risk Identification
  • 2.2 Scenarios that can constitute a risk
  • 2.3 Risk Identification Template
  • 2.4 Risk Assessment
  • 2.5 Risk Strategies
  • 2.6 Risk Register

3. DEVELOPING CONTINGENCY PLANS
On completion of this section you will be able to: * Contingency plans are developed and documented in accordance with the entity's policies and procedures. * Contingency plans are communicated to relevant stakeholders in accordance with the entity's risk management procedures. * Contingency plans are distributed and stored in accordance with the entity's risk management procedures. Although uncertainty-based risks are difficult, if not impossible, to predict, there are ways in which businesses can prepare for a significant adverse outcome. This is known as risk recovery. Businesses should consider adopting a structured approach to planning for recovery. This planning may take many forms, including the following: • Crisis or emergency management planning The business anticipates what might occur in a crisis or emergency, such as a fire or another physical threat, and then plans to manage this in the short term. This will include listing emergency contact details and training staff in evacuation and emergency response procedures. • Business continuity planning The business moves beyond the initial response of a crisis or emergency and plans for recovery of business processes with minimal disruption. This might, for example, include ensuring that there is sufficient documentation of processes if a key staff member is unavailable to return to work and another staff member is required to fulfil that role, identifying options for alternative premises if the existing premises are damaged, or documenting alternate suppliers for key supply material if a key supplier does not fulfil their contract. • Contingency planning Contingency planning can be a combination of the above. A contingency planning tool can help to identify what should be done to minimise the impact of a negative consequence on key business processes arising from an uncertainty-based risk. This would include the initial response (crisis management) and the delayed response (business continuity).

  • 3.1 Developing Contingency Plans
  • 3.3 Storage of Contingency Plans
  • 3.2 Communicating Contingency Plans

4. TESTING AND REVISING CONTINGENCY PLANS
On completion of this section you will be able to: * Contingency plans are tested in accordance with the entity's risk management procedures. * Recommendations on improvements to the contingency plans are documented in relation to the findings of the testing. * Contingency plans are revised to incorporate recommendations from the testing in accordance with the entity's policies and procedures. An untested plan is worthless, as there is a high probability of it failing under the pressure of an actual emergency. Testing verifies the effectiveness of your plan, trains plan participants on what to do in a real scenario and identifies areas where the plan needs to be strengthened.

  • 4.1 Testing Contingency Plans
  • 4.2 Recommendations on Improvements to Contingency Plans
  • 4.3 Revising Contingency Plans
R250

Material Includes

  • Online content
  • Downloadable Templates in Word
  • Youtube videos

Requirements

  • This is a self-directed online training topic.

Audience

  • This programme is intended for managers in all economic sectors. These managers would typically be second level managers such as heads of department, section heads or divisional heads, who may have more than one team reporting to them.