Risk and the risk management process
5 step process:
Make list of potential risks continually.
Identify risks facing the company - through consultation with stakeholders
Decide on acceptable risk
Decide on acceptable risk - and the loss of return/ extra costs associated with reduced risks
Prioritise according to threat/likelihood.
Assess the likelihood of the risk occurring - management attention obviously on the higher probability risks
Plan for Risk
Look at how impact of these risks can be minimised - through consultation with affected parties.
Avoid or make contingency plans (TARA)
Assess risks continually.
Understand the costs involved in the internal controls set up to manage these risks - and weighed against the benefits
Why do all this?
To ensure best use is made of opportunities
Risks are opportunities to be siezed
Can help enhance shareholder value