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Risk Management - Coggle Diagram

- - - - Reduced Cost
      - Increased Efficiency
      - Improved Quality
  - - - Estimating the likelihood and impact of risks
      - Profiling risks to understand their characteristics
      - Involves identifying & describing risks
    - - Helps to make decisions bout the significance of risks to the organisation
      - Determine whether a specific risk should be accepted or treated
      - Involves comparing estimated risks against established risk criteria
  - - - If business is uncertain about the level of demand for their product they may:
        
        order too little
        
        Cant meet customer demand
        
        order too much
        
        Storage and carrying Cost
        
        In both this cases, the uncertainty related to a positive outcome
  - - - Selecting and implementing measures to modify risk
        
        Reducing the impact of the risk
        
        Reducing the likelihood of the risk occuring
      - Major element being risk control and mitigation
        
        Having contingency plans in place
        
        Implementing recovery measures
- - - - Risk of hiring incompetent or unqualified staff with false credentials
    - - Risk of receiving low-quality goods and services from suppliers
    - - Risk of system not meeting organisation's needs
    - - Risk of absenteeism or strikes by employees
    - - Risk of insolvency due to inability to pay off debt on time
    - - Risk of obsolescene of products and services
    - - Risk of insolvency due to inability to pay off debt on time
  - - - Regulations Risk
      - Board Composition Risk
      - Contracts Risk
      - Suppliers Risk
      - Environmental Risk
    - - Natural events Risk
    - - Competition Risk
      - Customer Changes Risk
      - Industry Changes Risk
      - Customer demand risk
    - - Political Instability Risk
    - - Foreign Exchange Risk
      - Credit Risk
      - Interest Rate Risk
- - - - Critical dependencies of the business
      - Sustainability
      - Affect income streams
      - Legitimate interests of stakeholders
  - - - 3.) Nature of the risk
        
        What type of risk is it? Is it internal or external, is it financial, economic, compliance
      - 4.) Stakeholders
        
        Who are the stakeholders affected by this risk, and why have they been affected
      - 2.) Scope of the risk
        
        What is the actual risk? this involves a description of what the risk is
      - 5.) Quantification of risk
        
        What is the significance and probability of risk
      - 1.) Name of the risk
        
        What can we call this risk
      - 6.) Risk tolerance or appetite
        
        Involves determining how much risk the organisation is willing to take on
  - - - Ongoing process defined in risk management plan
    - - Assurance over process effectiveness given to BODs, audit committee and stakeholders
    - - Controls implemented to address risks
    - - Communicated to all stakeholders via integrated report
- - - - Likely to occur in ten years or less than 25% chance of occurrence (but greater than 2%)
        
        Can be difficult to control due to some external influences
        
        History of occurrence in the organisation
        
        Could occur more than once within the next ten years
    - - Not likely to occur in ten years or less than 2% chance of occurrence
        
        Has not occurred in this country
        
        Would be surprising if it occurred
    - - Likely to occur in the next year or more than 25% chance of occurrence
        
        Has occurred within the last two years
        
        Typical of operations of this kind due to external influences
        
        Potential of occurring several times within the next ten years
  - - - Reasonable prospect of favourable outcome in the next year or 25% to 75% chance of occurrence
        
        Opportunity which may be achievable, but requires careful management
        
        Might be categorised as a stretch goal in business plan
    - - Some chance of favourable outcome in the medium term or less than 25% chance of occurrence
        
        Possible opportunity which has yet to be fully investigated by management (Lack of information)
        
        The opportunity for which the likelihood of success is low on the basis of management resources currently being applied (lack of resource)
    - - Favourable outcome is likely to be achieved in the next year or better than 75% chance of occurrence
        
        Clear opportunity which can be relied on with reasonable certainty to be achieved in the short term, based on current management processes
- - - - This helps organisations to develop effective systems of interna control tailored to their specific circumstances
      - Does not provide a rigid set of rules to follow but a set of principles that can be customized for each organisation's needs
      - This allows greater flexibility in designing and implementing internal control, making it more relevant and practical for each organisation
  - - - Pertain to internal and external financial and non-financial reporting
    - - Ensures adherence to laws and regulations
    - - focuses on the effectiveness and efficiency of an organisation's operations and safeguarding assets against loss
  - - - Identifying and analysing risks
    - - Designing and implementing policies and procedures to mitigate identified risks
    - - Refers to the policies and procedures in place to ensure effective control
    - - Gathering and disseminating info needed for effective control
    - - Involves ongoing assessments and evaluations of the effectiveness of the internal control system
  - - - Provides oversight of internal control systems
      - Improves confidence in the achievement of objectives
      - Identifies, analyses and responds to risk
    - - Provides greater understanding of the requirement of an effective system of internal control
      - Improves confidence in the organisation's ability to respond to changes
      - Enables management to eliminate ineffective controls
    - - Identifies and analyses risks
      - Eliminates ineffective controls
      - Provides a flexible means of applying internal control