PDF Fundamentals of Risk Management: Understanding Evaluating and Implementing Effective Risk Management

CONTENTS

List of figures

List of tables

Preface

Acknowledgements



Introduction



PART ONE Introduction to risk management

Learning outcomes for Part One

Part One Further reading


01 Approaches to defining risk



Definitions of risk

Types of risks

Risk description

Inherent level of risk

Risk classification systems

Risk likelihood and magnitude


02 Impact of risk on organizations

Level of risk

Impact of hazard risks

Attachment of risks

Risk and reward

Risk and uncertainty

Attitudes to risk


03 Types of risks

Timescale of risk impact

Hazard, control and opportunity risks

Hazard tolerance

Mitigation of hazard risks

Management of uncertainties

Embracing opportunities


04 Development of risk management

Origins of risk management

Changes in the marketplace

Insurance origins of risk management

Specialist areas of risk management

Enterprise risk management

Levels of risk management sophistication

Bow-tie representation of risk management


05 Principles and aims of risk management

Principles of risk management

Importance of risk management

Risk management activities

Efficient, effective and efficacious

Implementing risk management

Achieving benefits


06 Risk management standards

Scope of risk management standards

Risk management process

Risk management framework

COSO ERM cube

Features of RM standards

Alternative approaches

Case studies:

Generali Group: Risk factors

Rio Tinto: Managing risk effectively


PART TWO Risk strategy

Learning outcomes for Part Two

Part Two Further reading


07 Risk management framework

Risk architecture, strategy and protocols

Risk management manual

Risk management architecture

Risk management strategy

Risk management protocols

Establishing the context


08 Risk management documentation

Risk management documentation

Risk response and improvement plans

Event reports and recommendations

Risk performance and certification reports

Designing a risk register

Using a risk register


09 Risk management responsibilities

Allocation of responsibilities

Range of responsibilities

Statutory responsibilities of management

Role of the risk manager

Risk architecture

Risk committees


10 Risk-aware culture

Styles of risk management

Defining risk culture

Measuring risk culture

Risk culture and risk strategy

Alignment of activities

Risk maturity


11 Risk training and communication

Consistent response to risk

Risk training and risk culture

Risk information and communication

Shared risk vocabulary

Risk information on an intranet

Risk management information systems (RMIS)


12 Risk practitioner competencies

Competency frameworks

Range of skills

Communication skills

Relationship skills

Analytical skills

Management skills

Case studies:

Invensys: Responsibilities and actions

Coventry Building Society: Governance and oversight


PART THREE Risk assessment

Learning outcomes for Part Three

Part Three Further reading


13 Risk assessment considerations

Importance of risk assessment

Approaches to risk assessment

Risk assessment techniques

Risk matrix

Risk perception

Risk appetite


14 Risk classification systems

Short, medium and long-term risks

Nature of risk classification systems

Examples of risk classification systems

FIRM risk scorecard

PESTLE risk classification system

Hazard, control and opportunity risks


15 Risk likelihood and impact

Application of a risk matrix

Inherent and current level of risk

Control confidence

4Ts of risk response

Risk significance

Risk capacity


16 Loss control

Risk likelihood

Risk magnitude

Hazard risks

Loss prevention

Damage limitation

Cost containment


17 Defining the upside of risk

Upside of risk

Opportunity assessment

Riskiness index

Upside in strategy

Upside in projects

Upside in operations


18 Business continuity planning

Importance of business continuity planning and disaster recovery planning

Business continuity standards

Successful business continuity planning and disaster recovery planning

Business impact analysis (BIA)

Business continuity planning and enterprise risk management

Civil emergencies

Case studies:

BG Group: Principal risks and uncertainties

IHG: Managing risk in hotels


PART FOUR Risk response

Learning outcomes for Part Four

Part Four Further reading


19 Enterprise risk management

Enterprise-wide approach

Definitions of ERM

ERM in practice

ERM and business continuity

ERM in energy and finance

Future development of ERM


20 Importance of risk appetite

Risk capacity

Risk exposure

Nature of risk appetite

Risk appetite statements

Risk management and uncertainty

Risk appetite and lifestyle decisions

21 Tolerate, treat, transfer and terminate

The 4Ts of hazard response

Tolerate risk

Treat risk

Transfer risk

Terminate risk

Project and strategic risk response


22 Risk control techniques

Hazard risk zones

Types of controls

Preventive controls

Corrective controls

Directive controls

Detective controls


23 Control of selected hazard risks

Cost of risk controls

Control of financial risks

Control of infrastructure risks

Control of reputational risks

Control of marketplace risks

Learning from controls


24 Insurance and risk transfer

Importance of insurance

History of insurance

Types of insurance cover

Evaluation of insurance needs

Purchase of insurance

Captive insurance companies

Case studies:

Nationwide: Risk management and control

Rank Group: Governance framework


PART FIVE Risk and organizations

Learning outcomes for Part Five

Part Five Further reading


25 Corporate governance model

Corporate governance

OECD principles of corporate governance

LSE corporate governance framework

Corporate governance for a bank

Corporate governance for a government agency

Evaluation of board performance


26 Stakeholder expectations

Range of stakeholders

Stakeholder dialogue

Stakeholders and core processes

Stakeholders and strategy

Stakeholders and tactics

Stakeholders and operations


27 Analysis of the business model

Simplified business models

Core business processes

Efficacious strategy

Effective processes

Efficient operations

Reporting performance


28 Project risk management

Introduction to project risk management

Development of project risk management

Uncertainty in projects

Project lifecycle

Opportunity in projects

Project risk analysis and management


29 Operational risk management

Operational risk

Definition of operational risk

Basel II

Measurement of operational risk

Difficulties of measurement

Developments in operational risk


30 Supply chain management

Importance of the supply chain

Scope of the supply chain

Strategic partnerships

Joint ventures

Outsourcing of operations

Risk and contracts

Case studies:

BBC: Corporate governance framework

Sainsbury: RM and internal controls


PART SIX Risk assurance and reporting

Learning outcomes for Part Six

Part Six Further reading


31 Evaluation of the control environment

Nature of internal control

Purpose of internal control

Control environment

Features of the control environment

CoCo framework of internal control

Risk-aware culture


32 Activities of the internal audit function

Scope of internal audit

Financial assertions

Risk management and internal audit

Risk management outputs

Role of internal audit

Management responsibilities


33 Risk assurance techniques

Audit committees

Role of risk management

Risk assurance

Undertaking an internal audit

Control risk self-assessment

Benefits of risk assurance


34 Reporting on risk management

Risk documentation

Sarbanes–Oxley Act of 2002

Risk reports by US companies

Charities’ risk reporting

Public sector risk reporting

Government report on national security


35 Importance of corporate reputation

Reputation and corporate governance

CSR and risk management

CSR and reputational risk

Supply chain and ethical trading

CSR reporting

Importance of reputation


36 Future of risk management

Review of benefits of risk management

Steps to successful risk management

Changing face of risk management

Emerging risks

Emerging trends in risk management

Future developments

Case studies:

John Lewis: Corporate social responsibility (CSR)

Man Group: Risk and control reporting

Appendix A: Abbreviations and acronyms

Appendix B: Glossary of terms

Appendix C: Implementation guide