Corporate Risk Management Essay

1. Identify and briefly describe the four basic techniques available to the risk manager for dealing with the pure risk facing by the firm. a. Risk Avoidance: This requires one to stay away from implicative activities. However, this only minimized the risk, it does not eliminating it. b. Risk Reduction: These are the steps taken by the company management to deal with real and perceived risks. They are not expected to eliminate the risk, but minimize the chance of its occurring. c. Risk Transfer: This is the shifting of a risk from one party to another for example, by insuring property. . Risk Retention: When the probability of risks occurring is very less, or the costs of mitigating the risk, this is the only way out. Additionally, in some businesses transferring the risk may be prohibitive, and the business has to consider risk retention.

2. List and briefly describe the seven steps in the risk management process as tabled in the ISO31000 International Risk Management Standard (2009). a. Avoiding the risk by deciding not to start or continue with the activity that gives rise to the risk. b. Taking or increasing the risk in order to pursue an opportunity. . Removing the risk source. d. Changing the likelihood. e. Changing the consequences. f. Sharing the risk with another party or parties (including contracts and risk ?nancing). g. Retaining the risk by informed decision.

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3. Describe the responsible of the risk manager and the risk manager’s position within the organization. a. Responsible of risk manager: This position has overall responsibility for the organization’s risk management function, providing advice and counsel to the executive team and the business unit who ultimately own accountability.

With a focus on process, identifies opportunities to mitigate or eliminate various types of risk by reviewing and/or developing, and executing policies and procedures across the business to include areas like compliance risk; credit and counterparty risk; execution and trading risk; and operational risk, as well as internally focused areas such as marketing, finance and human resources. b. The risk manager’s position within the organization: • Identify, measure, and mitigate risks resulting from human error, unsupervised trading, transaction processing failure, systems weaknesses, lack of data integrity, and fraud.

Work closely with market and credit risk specialists to control the organization’s overall risk exposure. • Focused on operational and control enhancement, enterprise risk management, revenue enhancement and other advisory services dealing with investment management, portfolio analysis, financial forecasting. • Identify and understand business problems, design, and conduct analyses, recommend services, and assist with implementation by providing analytical support to practice and client leaders. • Perform audits, including internal control evaluations and tests of controls in accordance with audit programs and department policies and tandards. Ensure that there are documented processes and procedures, and test same. • Develop and sustain relationships with business units and develop a continuing process of risk assessment

• Contribute to design, preparation, and analysis of reports and findings in a clear, logical, and concise manner • Devise appropriate analyses, metrics, and measures in a constantly changing environment • Perform detailed risk and controls reviews of key processes, identify potential weaknesses, and recommend practical alternatives for mitigation and improvement • Other duties and responsibilities as assigned. . What is the relationship between risk management and insurance management? In your answer you should demonstrate an understanding of the difference between the two fields? The relationship between risk management and insurance management is they connected to each others. Risk management are a process of identified the risk, analyze the risk and mitigation of uncertainty in investment decision-making that could be faces by the organization. On the other hand, insurance management is a general term used to describe an insurance broker or services firm.

This type of company typically provides a range of insurance products. The product offering is typically focused on a specific sector of the market, such as businesses or individuals. Insurance is a service that allows the client to purchase protection against specific future perils. The cost of the insurance is offset by the services provided by the company, in the event of a loss. As a conclusion, risk management need the insurance management to perform and fulfills the deficiency they had found within the organization to hedging their uncertainty losses that could occur in their organization.


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