End

End

Risk Management

By

©UNCTAD 2000 1
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What
What is
is Risk
Risk Management?
Management?

Who
Who uses
uses Risk
Risk Management?
Management?

How
How is
is Risk
Risk Management
Management used?
used?

Risk
Risk Management
Management in
in Customs
Customs

How
How do
do you
you use
use it
it in
in Customs?
Customs?
Next
Next
Mouse ‘Click’ to move on to the next slide
©UNCTAD 2000 2
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What
What is
is Risk
Risk Management?
Management?

• Good management practice

• Process steps that enable improvement
in decision making
• A logical and systematic approach
• Identifying opportunities
• Avoiding or minimising losses

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©UNCTAD 2000 3
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What
What is
is Risk
Risk Management?
Management?

Risk Management is the name given

to a logical and systematic method
of identifying, analysing, treating
and monitoring the risks involved in
any activity or process.

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©UNCTAD 2000 4
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What
What is
is Risk
Risk Management?
Management?

Risk Management is a
methodology that helps managers
make best use of their available
resources

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Next

©UNCTAD 2000 5
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Who
Who uses
uses Risk
Risk Management?
Management?

Risk Management •• Finance

Finance and
and
practices are widely used Investment
Investment
in public and the private •• Insurance
sectors, covering a wide Insurance
range of activities or •• Health
Health Care
Care
operations.
•• Public
Public
These include: Institutions
Institutions
•• Governments
Governments
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©UNCTAD 2000 6
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Who
Who uses
uses Risk
Risk Management?
Management?

• Effective Risk Management

is a recognised and valued skill.

• Educational institutions have formal

study courses and award degrees in Risk
Management.

• The Risk Management process is well

established. (International RM process
standards.)

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©UNCTAD 2000 7
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Who
Who uses
uses Risk
Risk Management?
Management?

Risk Management is
now an integral part of business
planning.

Next
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©UNCTAD 2000 8
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How
How is
is Risk
Risk Management
Management used?
used?

The Risk Management

process steps are a
There are
generic guide for
any organisation, 7 steps
in the RM
regardless of the
process
type of business,
activity or function.

Next
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©UNCTAD 2000 9
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The basic process steps are:

Establish
Establish the
the context
context

Identify
Identify the
the risks
risks

Analyse
Analyse the
the risks
risks

Evaluate
Evaluate the
the risks
risks

Treat
Treat the
the risks
risks

Next
Next

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‘Risk’ is dynamic and subject to constant

change, so the process includes
continuing:

Monitoring
Monitoring and
and review
review

and

Communication
Communication && consultation
consultation

Next
Next

©UNCTAD 2000 11
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The Risk Management process:

Establish
Establish the
the context
context

The strategic and organisational context

in which risk management will take
place.
For example, the nature of your
business, the risks inherent in your
business and your priorities.

Communicate
Communicate && consult
consult Next
Next

©UNCTAD 2000 12
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The Risk Management process:

Identify
Identify the
the risks
risks
Defining types of risk, for instance,
‘Strategic’ risks to the goals and
objectives of the organisation.
• Identifying the stakeholders, (i.e.,who
is involved or affected).
• Past events, future developments.
Monitor
Monitor and
and review
review
Communicate
Communicate && consult
consult Next
Next

©UNCTAD 2000 13
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The Risk Management process:

Analyse
Analyse the
the risks
risks

How likely is the risk event to happen?

(Probability and frequency?)
What would be the impact, cost or
consequences of that event occurring?
(Economic, political, social?)

Monitor
Monitor and
and review
review
Communicate
Communicate && consult
consult Next
Next

©UNCTAD 2000 14
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The Risk Management process:

Evaluate
Evaluate the
the risks
risks

Rank the risks according to

management priorities, by risk
category and rated by likelihood and
possible cost or consequence.
Determine inherent levels of risk.

Monitor
Monitor and
and review
review
Communicate
Communicate && consult
consult Next
Next

©UNCTAD 2000 15
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The Risk Management process:

Treat
Treat the
the risks
risks

Develop and implement a plan with specific

counter-measures to address the
identified risks.
Consider:
• Priorities (Strategic and operational)
• Resources (human, financial and technical)
• Risk acceptance, (i.e., low risks)
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©UNCTAD 2000 16
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The Risk Management process:

Treat
Treat the
the risks
risks
Document your risk management plan and
describe the reasons behind selecting the
risk and for the treatment chosen.
Record allocated responsibilities, monitoring
or evaluation processes, and assumptions on
residual risk.

Monitor
Monitor and
and review
review
Communicate
Communicate && consult
consult Next
Next

©UNCTAD 2000 17
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The Risk Management process:

Monitor
Monitor and
and review
review
In identifying, prioritising and treating risks,
organisations make assumptions and decisions
based on situations that are subject to
change, (e.g., the business environment,
trading patterns, or government policies).
Risk
Risk Management
Management policies
policies and
and decisions
decisions
must
must be
be regularly
regularly reviewed.
reviewed.

Communicate
Communicate && consult
consult Next
Next

©UNCTAD 2000 18
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The Risk Management process:

Monitor
Monitor and
and review
review
Risk Managers must monitor activities and
processes to determine the accuracy of
planning assumptions and the effectiveness
of the measures taken to treat the risk.
Methods can include data evaluation,
audit, compliance measurement.

Communicate
Communicate && consult
consult Next
Next

©UNCTAD 2000 19
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Risk
Risk Management
Management in
in Customs
Customs
Customs administrations have turned
increasingly to Risk Management as an
effective means of meeting national
objectives.
Administrations provide facilitation while
maintaining control over the international
movement of goods and persons.
Thus Risk management helps in matching
Customs priorities to resources.

Next
Next

©UNCTAD 2000 20