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RISK TOPIC 2: ORANGE BOOK (RISK APPETITE (level of risk appetite…
RISK TOPIC 2: ORANGE BOOK
RISK MANAGEMENT MODEL
Published with the permission of HM Treasury on behalf of the Controller of Her Majesty’s Stationery Office
Main reference guidance on risk management in UK Government
Provides a basic introduction to its concepts, development and implementation of risk management processes.
Intended for a wide range of users from newcomers to risk management，trainers, and Audit Committee members, to senior leadership and experienced risk managers
IDENTIFYING RISK
In order to manage risk, an organization needs to know what risks it faces, and to evaluate them. Identifying risks is the first step in building the organization’s risk profile.
PHASES OF RISK
Initial risk identification
Has not previously identified in structured way
For a new organization
A new project or activity
Continuous risk identification
Which previously did not arise
Changes in existing risks
Exist ceasing to be relevant which is routine
Approach to identifying risk
Commissioning a risk review
A designated team is established
consider all the operations and activities of the organization in relation to its objectives
Risk self-assessment
each level and part of the organization is invited to review its activities
ASSESSING RISKS
Ensure that there is a clearly structured process in which both likelihood and impact are considered for each risk.
Record the assessment of risk in a way which facilitates monitoring and the identification of risk priorities.
Be clear about the difference between inherent and residual risk.
RISK APPETITE
series of boundaries, appropriately authorised by management, which give each level of the organisation clear guidance on the limits of risk which they can take, whether their consideration is of a threat and the cost of control, or of an opportunity and the costs of trying to exploit.
THREATS
embraces the level of exposure, which is considered tolerable and justifiable should it be realised
OPPORTUNITIES
embraces consideration of how much one is prepared to actively put at risk in order to obtain the
benefits of the opportunity.
level of risk appetite
Corporate
Delegated
Project
