ACCA SBL Syllabus D. Risk - Risk Management Process - Notes ^{3 / 9}

5 step process:

1. Identify Risk 

   Make list of potential risks continually.

   Identify risks facing the company - through consultation with stakeholders

2. Decide on acceptable risk

   Decide on acceptable risk - and the loss of return/ extra costs associated with  reduced risks

3. Analyse Risk

   Prioritise according to threat/likelihood.

   Assess the likelihood of the risk occurring - management attention obviously on the higher probability risks

4. Plan for Risk

   Look at how impact of these risks can be minimised - through consultation with affected parties.  

   Avoid or make contingency plans (TARA)

5. Monitor Risk

   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