Premium Essay

Management of Risk

In:

Submitted By mtvvvv
Words 14427
Pages 58
RISK MANAGEMENT – AN AREA OF KNOWLEDGE FOR ALL ENGINEERS
A Discussion Paper By: Paul R. Amyotte, P.Eng.1 & Douglas J. McCutcheon, P.Eng.2
Chemical Engineering Program Department of Process Engineering & Applied Science Dalhousie University Halifax, Nova Scotia, Canada B3J 2X4
2 1

Industrial Safety & Loss Management Program Faculty of Engineering University of Alberta Edmonton, Alberta, Canada T6G 2G6

Prepared For: The Research Committee of the Canadian Council of Professional Engineers

October 2006

SUMMARY
The purpose of this paper is to “seed” the discussion by the Research Committee of the Canadian Council of Professional Engineers (CCPE) on the topic of risk management. The paper is in part a research paper and in its entirety a position paper. As can be inferred from the title, the authors hold the firm opinion that risk management is an area of knowledge with which all engineers should have familiarity and a level of competence according to their scope of practice. The paper first makes the distinction between hazard and risk. The two terms are often used interchangeably when in fact they are quite different. A hazard is a chemical or physical condition that has the potential to cause harm or damage to people, environment, assets or production. Risk, on the other hand, is the possibility or chance of harm arising from a hazard; risk is a function of probability and severity of consequences. A description of the process of risk management is then given. A generic framework for risk management is presented to illustrate the essential activities of hazard identification and the analysis, assessment and management of risks. Key activities in this framework are the decisions that must be made on risk acceptability – whether to continue with an activity and monitor the risk, to implement risk reduction measures and then conduct a re-assessment, or

Similar Documents

Premium Essay

Risk Management

...REPORT ON THE PROPOSED RISK MANAGEMENT POLICY, ITS IMPORTANCE, STRATEGY AND RISK CULTURE OF CHOPPIES ENTERPRISE LIMITED PRESENTED TO: BOARD OF DIRECTORS, CHOPPIES GROUP OF COMPANIES BY: Mr Monamodi Collen Gontse (RISK MANAGER) 1st OCTOBER 2014 Choppies Accounts Boardroom; 2nd Floor Gaborone International Commerce Park Choppies Enterprises Limited, PLOT No 100 Gaborone International Commerce Park, East Gate Gaborone West, Botswana Contents 1. TERMS OF REFERENCE 3 2. ACKNOWLEDGEMENT 4 3. EXECUTIVE SUMMARY 5 4. INTRODUCTION 6-7 5. BACKGROUND 7-9 6. IMPORTANCE OF RISK MANAGEMENT POLICY & CHOPPIES RISK MANAGEMENT POLICY 10-12 7. RISK MANAGEMENT ARCHITECTURE 12-15 8. RISK AWARE CULTURE 15-17 9. ISO 31000 APPLICATION IN CHOPPIES ENTERPRISES LTD 17-18 10. RECOMMENDATIONS 18 11. CONCLUSION 18 12. References 19-20 Terms of Reference This report strives to evaluate the effectiveness of Choppies Enterprises Limited ERM, using the ISO 31000 Risk Management framework as a standard, documenting the findings...

Words: 5858 - Pages: 24

Premium Essay

Risk Management

...Chapter 1 6 1. INTRODUCTION TO RISK MANAGEMENT 6 1.1. Risk Management-An Overview 6 1.2. IMPORTANCE OF THE RESEARCH 7 1.3. RISK MANAGEMENT EMERGANCE-REASONS AND FACTS 8 1.4. RESEARCH METHODOLOGY 9 1.5. LIMITATION OF RESEARCH 10 CHAPTER 2 11 2. LITERATURE REVIEW 11 2.1. DEFINITION OF RISK MANAGEMENT 11 2.2. DIFFERENT TYPES OF RISKS IN BUSINESS 12 2.3. CONSTRAINTS 14 2.4. RISK ASSESSMENT 14 2.5. HISTORY OF RISK MANAGEMENT 15 2.6. PROCESS OF RISK MANAGEMENT 15 2.7. Enterprise Risk Management 16 2.8. ERM&CRO 18 2.9. BANKING RISK 19 2.10. Credit risk management in UK banking sector 19 CHAPTER 3 21 3. ANALYSIS AND DISCUSSION 21 3.1. ECONOMIC CRISIS AND BANKS OF UK 21 3.2. Minimizing the moral difficulties involved in the originate and distribute model of banking. 22 3.3. Transparency of risk in financial products is essential if regulation is to work 22 3.4. Reform Basel ii so that it is not so pro-cyclical 23 3.5. RISK MANAGEMENT AND COSTS OF BANKING CRISIS 24 3.6. Costs of Risk 25 3.7. SIGNIFICANCE OF REGULATORY STYLE 26 3.8. KEY WAYS TO MITIGATE BUSINESS RISK 27 3.9. Risk dash board every bank needs 28 3.10. ROYAL BANK OF SCOTLAND 29 3.11. RISK MANAGEMENT AT KENYA COMMERCIAL BANK (KCB) 29 3.12. Risk management in hotel and tourism industry in India and in the whole world 30 3.13. The management of risk in agricultural sector in the United States of America 31 3.14. THE ROLE OF INTERNAL AUDITORS IN RISK MANAGEMENT 33 4. CONCLUSION AND RECOMMENDATION...

Words: 13332 - Pages: 54

Premium Essay

Risk Management

...Structure for an IT Risk Management Plan Course Name and Number: _____________________________________________________ Student Name: ________________________________________________________________ Instructor Name: ______________________________________________________________ Lab Due Date: ________________________________________________________________ Overview In this lab, you defined the purpose of an IT risk management plan, you defined the scope for an IT risk management plan that encompasses the seven domains of a typical IT infrastructure, you related the risks, threats, and vulnerabilities to the plan, and you created an IT risk management plan outline that incorporates the five major parts of an IT risk management process. Lab Assessment Questions & Answers 1. What is the goal or objective of an IT risk management plan? 2. What are the five fundamental components of an IT risk management plan? 3. Define what risk planning is. 4. What is the first step in performing risk management? 5. What is the exercise called when you are trying to gauge how significant a risk is? 25 6. What practice helps address a risk? 7. What ongoing practice helps track risk in real time? 8. True or False: Once a company completes all risk management steps (identification, assessment, response, and monitoring), the task is done. 9. Given that an IT risk management plan can be large in scope, why is it a good idea to develop a risk management plan team? 10...

Words: 434 - Pages: 2

Premium Essay

Risk Management

...RISK MANAGEMENT Definition * In the world of finance, risk management refers to the practice of identifying potential risks in advance, analysing them and taking precautionary steps to reduce or curb the risk. * Essentially, risk management occurs anytime an investor or fund manager analyses and attempts to quantify the potential for losses in an investment and then takes the appropriate action given their investment objectives and risk tolerance. * Inadequate risk management can result in severe consequences for companies as well as individuals. * Simply put, risk management is a two-step process - determining what risks exist in an investment and then handling those risks in a way best-suited to your investment objectives. Description When an entity makes an investment decision, it exposes itself to a number of financial risks. The quantum of such risks depends on the type of financial instrument. These financial risks might be in the form of high inflation, volatility in capital markets, recession, bankruptcy, etc. So, in order to minimize and control the exposure of investment to such risks, fund managers and investors practice risk management. Not giving due importance to risk management while making investment decisions might wreak havoc on investment in times of financial turmoil in an economy. Different levels of risk come attached with different categories of asset classes. For example, a fixed deposit is considered a less risky investment...

Words: 532 - Pages: 3

Premium Essay

Risk Management

...IMT 4762 Risk Management 1 Report Police Group: Sumanth Ramanujapuram Vinay Krishna Vemuri Deming Yin 27.9.2013 1 0. Executive Summary As  we  have  been reviewing the current situation of Skyri police,  the duties and tasks of Skyri police fall into the following categories: ● Develop effective collaborative solutions with other operators and service providers. ● Coordination  of  the  goals,  plans  and  work  of   the  regional  police  districts  and  the special units ● Management of the police service ● Administration services to the public As with other public services in Skyri, the IT services in Skyri police is also outsourced. Currently all IT services are run by the new supplier “ITALL” since last year. Since there are only two IT employees in Skyri who also take care of other public services in Skyri, all the IT problems in Skyri could not be solved on time. In addition, same as other public services in Skyri, there are no IT­strategy and no policies for information security, and the Skyri police doesn’t have a personnel responsible for IT risk management. The employees in Skyri police don’t have IT risk management background. All the risk management tasks has fallen to the management officer, who has no special IT either. We found that information is usually classified inappropriately. We also noticed loss of devices especially USB storage devices that contains sensitive information. This cause confidential issues. There is no response to backup failure and inside attacks either...

Words: 4553 - Pages: 19

Premium Essay

Risk Management

... Rivers October 19, 2013 Project 1 Part 1: Risk Mgmt. Plan 1. Introduction Risk Mgmt. Plan Well for starters the purpose of this risk management for DLIS (Defense Logistics Information Service) plan will be similar to the purpose of any organization would be and that would be how to better protect and secure the company’s IT environment. The importance of this is major since there is all kind of important data that is on and transmitted throughout our networks on a daily basis. DLIS we must ensure that we implement all necessary preventative security measures as well as policies and procedures. We must do this by first of all ensuring that we have really good antivirus software installed on all of our systems and ensuring that it is always up to date. The next thing is extensively configuring our firewalls making it more difficult for our networks to be hacked. Another thing is data encryption which is very vital in securing all important data for our company and clients especially when we are performing data transmission over the networks. The last thing I want to mention which will be part of policies and procedure is implementing various password and logon policies and procedures for security purposes as well. As I stated the purpose of the development of this plan is to reduce the risk of threats and vulnerabilities on our networks. This is vital because threats and vulnerabilities definitely present risk(s) to any important company and client data. We...

Words: 2058 - Pages: 9

Premium Essay

Risk Management

...section explains why risks exist and highlights the purpose and importance of the risk management plan. It provides a general description of why risk management is essential to effectively managing a project and describes what is needed before risk management can begin. As organizations begin new projects they begin operating in an area of uncertainty that comes along with developing new and unique products or services. By doing so, these organizations take chances which results in risk playing a significant part in any project. The purpose of the risk management plan is to establish the framework in which the project team will identify risks and develop strategies to mitigate or avoid those risks. However, before risks can be identified and managed, there are preliminary project elements which must be completed. These elements are outlined in the risk management approach. This project is considered a medium risk project as it has an overall risk score of 24 on a scale from 0 to 100. The project risk score is the average of the risk scores of the most significant risks to this project. A risk score below 16 is low risk project, a score between 16 and 45 is a medium risk project and a score above 45 is a high risk project. Before risk management begins it is imperative that a foundation is established for providing structured project information, thus, the following project elements were completed and defined prior to developing this Risk Management Plan: • Define...

Words: 1968 - Pages: 8

Premium Essay

Risk Management

...11 Project risk management Planning for the unknown Gee whiz, Bobby! What if these ropes break? Don’t worry, Sally! I took care of it with risk planning. You can swing away without a care in the world! Even the most carefully planned project can run into trouble. No matter how well you plan, your project can always run into unexpected problems. Team members get sick or quit, resources that you were depending on turn out to be unavailable—even the weather can throw you for a loop. So does that mean that you’re helpless against unknown problems? No! You can use risk planning to identify potential problems that could cause trouble for your project, analyze how likely they’ll be to occur, take action to prevent the risks you can avoid, and minimize the ones that you can’t. this is a new chapter 543 risks might occur What’s a risk? There are no guarantees on any project! Even the simplest activity can run into unexpected problems. Any time there’s anything that might occur on your project and change the outcome of a project activity, we call that a risk. A risk can be an event (like a fire), or it can be a condition (like an important part being unavailable). Either way, it’s something that may or may not happen... but if it does, then it will force you to change the way you and your team will work on the project. If your project requires that you stand on the edge of a cliff, then there’s a risk that you could fall. If it’s very windy out or the ground is...

Words: 16923 - Pages: 68

Premium Essay

Risk Management

...JIT2 (Risk Management): Task 1A Our firm has been hired as a consultant, the first task my team and I have been assigned is to create and present to management both a risk management and a business contingency plan for our client. Both the legal and IT departments have expressed their concerns regarding the ethical use and protection of sensitive data, customer records, and other information systems content of both the firm and the client. In an effort to follow the company’s goal of each project building employee confidence and job satisfaction, the team has been allowed to select our first client. The client we choose can be a former or current employer, any local business, any nationally or internationally held publicly traded or privately held company. The one prerequisite is that the client operate globally in at least one aspect of it business. To help ensure anonymity and security any information that could be considered confidential, proprietary, or personal in nature will be excluded. No actual names of people, suppliers, the company, or other identifiable information will be included. In addition every effort will be made to ensure fictional names used will be obscure as possible. Company-specific data, including financial information, will be addressed in the most general and generic means possible when appropriate. Per the client’s request will address the following items: A. Generate a risk register that includes eight valid risks faced by the client. The...

Words: 2097 - Pages: 9

Premium Essay

Risk Management

...in chapter 8, conduct a preliminary risk assessment of the organization’s critical information. Answer each of the questions covered in the chapter. What would it cost if the organization lost all of their data? [Insert Answers Here] The cost would honestly be potential loss of human life, therefore Billions. 1. What is risk management? A process that identifies vulnerabilities in an organization’s information system and takes carefully reasoned steps to assure the confidentiality, integrity, and availability of all components in the organization’s information system. 2. List and describe the key areas of concern for risk management. Risk identification, risk assessment, and risk control 3. Why is identification of risks, through a listing of assets and their vulnerabilities, so important to the risk management process? 4. According to Sun Tzu, what two things must be achieved to secure information assets successfully? Know Yourself and know the enemy. 5. Who is responsible for risk management in an organization? 6. Which community of interest usually takes the lead in information asset risk management? 7. Which community of interest usually provides the resources used when undertaking information asset risk management? The resources used when undertaking information asset risk management is usually provided by all three communities: Information Security, Information Technology and General Management. 8. In risk management strategies, why must periodic reviews...

Words: 657 - Pages: 3

Premium Essay

Risk Management

...of an organization understand their responsibilities for achieving adequate information security and for managing information system-related security risks (National Institute of Standards and Technology, 2010). One common methodology for implementing information security is known as Certification and Accreditation. Certification and Accreditation is a process that ensures that systems and major applications adhere to formal and established security requirements that are well documented and authorized (Tipton & Krause, 2007). In order to improve information security, strengthen risk management processes, guarantee standardization, and enforce federal policies, the National Institute of Standards and Technology (NIST) partnered with the Department of Defense to transform the traditional Certification and Accreditation (C&A) process into the six-step Risk Management Framework (RMF) (National Institute of Standards and Technology, 2010). The Risk Management Framework provides a structured, yet flexible approach for managing risk to the business processes of a federal organization; however, these principles are crucial to both federal and commercial IT operations since they certify that the management of security risks is consistent with the organization’s mission objectives. Additionally, they ensure the risk management framework is smoothly integrated into the organization’s enterprise architecture...

Words: 1273 - Pages: 6

Premium Essay

Risk Management

...People and patterns: a case study of the relationship between risk management and knowledge management in financial services Ian Martin*, Aidan Prior*, Victoria Ward*, Clive Holtham** * Sparknow & Associates ** City University Business School Authors for Correspondence Professor Clive Holtham Cass Business School, City of London 106 Bunhill Row London EC1Y 8TZ Tel: +44 20 7040 8522 Email: C.W.Holtham@city.ac.uk Victoria Ward Sparknow 2 Dufferin Avenenue London EC1Y 8PJ Tel: +44 (0) 20 7 250 1202 Email: victoria@sparknow.net Aidan Prior Sparknow 2 Dufferin Avenenue London EC1Y 8PJ Tel: +44 (0) 20 7 250 1202 Email: aidan@sparknow.net ABSTRACT Key words: operational risk, knowledge management, communications, story, slowness, trust, community of practice, patterns This paper proposes that there is great value in viewing knowledge management as risk management. Knowledge management can be instrumental in developing individual and organisational responses to operational risk, which reflects the ‘consequential’ risks associated with being in business at all. The ability to handle operational risk in a global business depends on highly effective knowledge circuits. These circuits can be supported by information and technology systems but are fragile, need constant attention and depend largely on the capacity of individual professionals to work collectively in pattern recognition, analysis and predictive approaches and to form open channels of communication, bonds of trust and...

Words: 6670 - Pages: 27

Premium Essay

Risk Management

...Chapter 2 Objective of Risk Management I. Multiple Choice 1. The fundamental objective of risk management is: a. diversification b. minimize the cost of risk c. hedging d. loss control Answer: b Type: K 2. If unexpected increases in losses from price risk are not offset by cash inflows from insurance contracts, hedging arrangements or other contractual risk transfers, they will result in: a. an increased stock price b. a reduced stock price c. bankruptcy d. increased diversification Answer: b Type: K 3. Johnson Incorporated, located in California, had a $1 million uninsured loss due to an earthquake in 1997. What impact is this likely to have on the firm’s value? a. It will have no impact. b. The firm value will increase by $1 million. c. The firm value will decrease by $1 million. d. The firm value will probably decrease, but the amount of decline will depend on other factors such as the firm’s level of diversification of risk. Answer: d Type: A 4. The cost of risk may include all of the following except: a. the cost of insurance. b. the cost of raw materials. c. the cost of increased precautions to control losses. d. the cost of investments in information to reduce risk. Answer: b Type: A 5. Maximizing the value of the firm is the same thing as minimizing the cost of risk if: a. the managers are socially responsible. b. the cost of risk is defined to include all risk-related costs from the perspective of...

Words: 1603 - Pages: 7

Premium Essay

Risk Management

...Risk Management Health care institutions are the centers for different kind of healthcare services, so when patients and their families come for check-ups, surgeries, acute hospitalizations, tests, minor procedures, etc. they expect quality care and positive outcomes. Issues come up when patients’ expected outcomes are not realized due to one reason or another. Factors that may prevent positive outcomes in patient care may be quality management issues or risk management issues. Before a full introduction and analysis of risk management in my place, one has to understand quality management and risk management. In terms of quality management, they are issues that arise in the work place as a result of poor management and need to be improved on. They are more prevention oriented (Sullivan and Decker, 2009). In the case of risk management, it is about issues that are problematic throughout a health organization and may lead to poor patient outcomes. As described by Sullivan and Decker (2009), “risk management’s purpose is to identify, analyze, and evaluate risks and then to develop a plan for reducing the frequency and severity of accidents and injuries” (p. 84). Risk management is not about monthly, quarterly or yearly assessment and improvement of programs, but a daily assessment of issues that arise in the work place that may lead to bigger problems if not corrected. Current risk management issue at my work place. The main current risk management issue in my place of employment...

Words: 1761 - Pages: 8

Premium Essay

Risk Management

...Risk Mismanagement What is VaR? Is it a tool for measuring risk or is it simply just another mathematical equation that requires more analysis than people are willing to perform? Well, after reading the article by Joe Nocera I’m officially confused. In economics and Finance, VaR is defined as the maximum value (loss) at risk with a defined confidence level over a specified period of time. In other words, a $1 million weekly VaR means that the company has a 99% (assuming 99% is the confidence level) chance of losing up to $1 million that week. So this means that it doesn’t account for all the risk there is out there. The above VaR clearly shows that there is that 1% chance of losing a minimum of $1 million if things go haywire. The 1% is what this debate is all about and accounts for the unexpected and rare risks that companies are not prepared for. VaR was popularized in the early 90s as a measure of risk so firms can understand their individual and firm-wide risk so as to set aside cash to cover any risks that could go bad. All was well and accepted on Wall Street until there came the “black swans” or periods in time where markets crashed in unexpected ways to devastating extents. Then started the debate of whether VaR actually measures risk that can be blindly seen a dollar figure to keep aside or if VaR is just a value that has so much more depth to it than just the dollar figure. Is it worth using or is it only there to cause problems? To me, VaR seems like a pretty...

Words: 477 - Pages: 2