Professional Documents
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PRESENTED BY
VARUN RAO
DIPENTI JETHWA
SHAILENDRA BANWANKAR
CONCEPT OF RISK
Risk is the potential that a chosen action or activity
(including the choice of inaction) will lead to a loss
(an undesirable outcome). The notion implies that a
choice having an influence on the outcome exists
(or existed).
In finance, risk is the probability that an
investment's actual return will be different than
expected.
RISK MANAGEMENT
Method of identifying, analysing, treating and
monitoring the risks involved in any activity or
process. the name given to a logical and systematic
method of identifying, analysing, treating and
monitoring the risks involved in any activity or
process.
7 STEPS IN RISK MANAGEMENT
Defining Objectives of Risk Management
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
Identify Risk Exposures
Identifying the stakeholders, (i.e.,who is
involved or affected).
Past events, future developments.
Financial Statement Analysis.
Preparing Checklist of Various losses that
may arise due to risk
Analysis of Risks
Probability and Frequency of happening of
Risk
Impact or Severity of risk on various
stakeholders.
Evaluate the 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
Treat the Risks
Develop and implement a plan with specific
counter-measures to address the identified
risks.
Consider:
Priorities (Long term and Short term)
Resources (human, financial and technical)
Risk acceptance, (i.e., low 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 & Review