Welcome to Jefferson Welcome to Jefferson https://wa.philau.edu/ Х Bb Discussion Board - 185 x S (2) SOLUTION: Two dis x k Kindle Cloud Reader х Abdullaza g х . Secure https://read.amazon.com/ref=kcr_app_surl_cloudreader * 0 FUNDAMENTALS OF RISK MANAGEMENT: UNDERSTANDING, EVALUATING AND IMPLEMENTI... Embedded very good set of principles that are the foundations of a successful approach to risk management within any organization. A more detailed description of the PACED principles of risk management is set out in Table 5.1. The approach to risk management is based on the idea that risk is something that can be identified and controlled. Risk management activities need to be embedded within the organization. Risk management activities must be dynamic and responsive to emerging and changing risks. Dynamic TABLE 5.1 Principles of risk management Principle Description Risk management activities must Proportionate be proportionate to the level of risk faced by the organization. ERM activities need to be aligned Aligned with the other activities in the organization. In order to be fully effective, the Comprehensive risk management approach must be comprehensive. The above statement of principles relates to the essential features of risk management. These principles describe what risk management should be in practice. Some lists of principles also include information on what risk management should do or deliver. It is useful to separate the principles of risk management into two distinct lists: what should be the characteristics of risk management, as listed above; and what it should deliver, as listed below: • mandatory obligations placed on the organization; • assurance regarding the management of significant risks; Page 57 [N OM 9 O ENG 12:16 AM 2/3/2018 Q Welcome to Jefferson Welcome to Jefferson https://wa.philau.edu/ Х Bb Discussion Board - 185 X S (2) SOLUTION: Two dis X k Kindle Cloud Reader х Abdullaza g х Secure https://read.amazon.com/ref=kor_app_surl_cloudreader * FUNDAMENTALS OF RISK MANAGEMENT: UNDERSTANDING, EVALUATING AND IMPLEMENTI... 05 Principles and aims of risk management Principles of risk management detailed list of the suggested principles of risk management. Many of the lists of principles set out a description of what risk management activity should be and what it should achieve. It is important to distinguish between what the risk management initiative has been set up to achieve and the nature of the risk management framework that will be put in place. It is suggested that a successful risk management initiative (and framework) will be: proportionate to the level of risk within the organization; aligned with other business activities; • comprehensive, systematic and structured; • embedded within business procedures and protocols; • dynamic, iterative and responsive to change. This provides the acronym PACED and provides a The main principle of risk management that it delivers value to the organization. In other words, risk management activities are designed to achieve the best possible outcome and reduce volatility or uncertainty of outcomes. However, risk management operates on a broader set of principles, and there have been several attempts to define these principles. ISO 31000 includes a Page 57 OM O ENG 12:16 AM 2/3/2018 Х Bb Discussion Board - 185 X S (2) SOLUTION: Two dis X k Kindle Cloud Reader х Abdulaziz g х Welcome to Jefferson Welcome to Jefferson https://wa.philau.edu/ Secure https://read.amazon.com/ref=kcr_app_surl_cloudreader * FUNDAMENTALS OF RISK MANAGEMENT: UNDERSTANDING, EVALUATING AND IMPLEMENTI... • decisions that pay full regard to risk considerations; • effective and efficient core processes. If organizations are to get maximum benefit out of their risk management activities, the above principles should be implemented when the risk management initiative is planned and the risk management framework is developed. In many ways, the starting point for all risk management activities is to decide what the organization is seeking to achieve. Table 5.2 sets out the possible purpose or motivation for a risk management initiative as mandatory, assurance, decision making and effective and efficient core processes (MADE2). Core processes represent the activities of the organization and can be strategic, tactical, operational or compliance (STOC) in nature. The objectives for risk management provide the acronym MADE2 and this confirms that outputs from risk management will lead to less disruption to normal efficient operations, a reduction of uncertainty in relation to tactics and improved decisions in relation to evaluation and selection of alternative strategies. In other words, a key part of risk management is improved organizational decision making The resources available for managing risk are finite and so the aim is to achieve an optimum response to risk, prioritized in accordance with an evaluation of the risks. Risk is unavoidable and every organization needs to take action to manage it in a way that it can justify to a level that is acceptable. The appropriate range of responses will depend on the nature, size and complexity of the organization and the risks it faces. TABLE 5.2 Risk management objectives Page 58 OM ENG 12:16 AM 2/3/2018 Welcome to Jefferson Welcome to Jefferson https://wa.philau.edu/ Х Bb Discussion Board - 185 x S (2) SOLUTION: Two dis X k Kindle Cloud Reader х Abdullaza х g Secure https://read.amazon.com/ref=kcr_app_surl_cloudreader * FUNDAMENTALS OF RISK MANAGEMENT: UNDERSTANDING, EVALUATING AND IMPLEMENTI... management Objective Description The basic objective for any risk Mandatory management initiative is to ensure conformity with applicable rules, regulations and mandatory obligations. The board and audit committee of an organization will require assurance that Assurance risk management and internal control activities comply with PACED. Risk management activities should Decision ensure that appropriate risk-based making information is available to support decision making. Effective Risk management considerations will and assist with achieving effective and efficient Jefficient strategy, tactics, operations and compliance to ensure the best core outcome with reduced volatility of processes results. Table 4.2 gives a number of examples that illustrate the importance of risk management. Risk management has taken on an increasingly high profile in recent times, because of the global financial crisis and the number of high-profile corporate failures across the world that preceded it. Also, risk management has become more important because of increasing stakeholder expectations and the ever-increasing ease of communication. As well as assisting with better decision making and improved efficiency, risk management can also contribute to the provision of greater assurance to stakeholders. This assurance has two important components. The directors of any organization need to be confident that risks have Screenshot saved that appropriate steps have be The screenshot was added to your OneDrive. Importance of risk OneDrive Page 59 OM ENG 12:16 AM 2/3/2018
Purchase answer to see full attachment