WOLLOUNI

VERSI
TY

KOMBOLCHAI
NSTI
TUTEOFTECHNOLOGY

SCHOOLOFTEXTI
LELEATHERAND
FASHI
ONTECHNOLOGY

DEPARTMENTOF:FOOTWEARTECHNOLOGY

TI
TLE:DEFI
NTI
ONANDPROCESSOFRI
SKMANAGMENT

NAME I
D

1.Sa
mue
lLe
yikun 4762/
11

2.Ka
sahunTe
gaw 4664/
11

3.As
hena
fiTe
kla
y 0857/
10

4.Te
wodr
osbr
hane 2098/
10

5.Te
mes
genTa
des
e 4799/
11

Submi
tt
edt
o:Abr
ham

Submi
ssi
onda
te:

I
Tabl
eofCont
ents
1.Def
ini
ti
onofRis
kMa
nage
ment 1
1.
1Thebe
nef
it
sandc
hal
le
nge
sofr
iskma
nage
ment 3
1.
1.1Be
nef
it
sofRi
skMa
nage
ment
: 3
1.
1.2Cha
ll
enge
sRi
skMa
nage
mentTe
amsShoul
dExpe
ctt
oEnc
ount
er: 3
1.
2Pr
oce
ssofRi
skMa
nage
men
t 4
1.
2.1Si
gni
fi
canc
eint
hePr
oce
ssofRi
skMa
nage
ment 4
1.
2.2Ne
edf
orRi
skMa
nage
mentPr
oce
ss 4
1.
3Fi
vema
ins
tepsi
nther
iskma
nage
mentpr
oce
ss 5
1.
3.1I
dent
if
yingt
heRi
sk 5
1.
3.2Ana
lyz
ingt
heRi
sk 6
1.
3.3Eva
lua
ti
ngt
heRi
sk 7
1.
3.4Tr
eat
ingt
heRi
sk 7
1.
3.4Moni
tor
inga
ndRe
vie
wingt
heRi
sk 8
1.
4Howt
obui
lda
ndi
mpl
eme
ntar
iskma
nage
mentpl
an 9
1.
5Co
ncl
usi
on 11
1.
6Re
fer
enc
e 12

I
I
1.De
fini
ti
onofRi
skMa
nage
ment

I
nthef
ina
nci
alwor
ld,r
iskma
nage
menti
sthepr
oce
ssofi
dent
if
ica
ti
on,a
nal
ysi
s,a
nda
cce
pta
nce
ormi
ti
gat
ionofunc
ert
ai
ntyi
ninve
stme
ntde
cis
ions
.Es
sent
ia
ll
y,r
iskma
nage
mentoc
cur
swhe
n
a
ninve
storo
rfundma
nage
rana
lyz
esa
nda
tt
empt
stoqua
nti
fyt
hepot
ent
ia
lforl
oss
esi
nan
i
nve
stme
nt,s
ucha
samor
alha
zar
d,a
ndt
hent
ake
sthea
ppr
opr
iat
eac
ti
on(
ori
nac
ti
on)gi
vent
he
f
und'
sinve
stme
ntobj
ect
ive
sandr
iskt
ole
ranc
e.Ri
ski
sthema
inc
aus
eofunc
ert
ai
ntyi
nany
or
gani
zat
ion.Thus
,compa
nie
sinc
rea
singl
yfoc
usmor
eoni
dent
if
yingr
isksa
ndma
nagi
ngt
hem
be
for
ethe
yeve
naf
fec
tthebus
ine
ss.Thea
bil
it
ytoma
nager
iskwi
llhe
lpc
ompa
nie
sac
tmor
e
c
onf
ide
ntl
yonf
utur
ebus
ine
ssde
cis
ions
.The
irknowl
edgeoft
her
iskst
heya
ref
aci
ngwi
llgi
ve
t
hemva
rio
usopt
ionsonhowt
ode
alwi
thpot
ent
ia
lpr
obl
ems
.

Ri
skma
nage
mente
ncompa
sse
sthei
dent
if
ica
ti
on,a
nal
ysi
s,a
ndr
espons
etor
iskf
act
orst
hatf
orm
pa
rtoft
hel
if
eofabus
ine
ss.Ef
fec
ti
ver
iskma
nage
mentme
ansa
tt
empt
ingt
ocont
rol
,asmuc
has
pos
sibl
e,f
utur
eout
come
sbya
cti
ngpr
oac
ti
vel
yra
the
rtha
nre
act
ive
ly.The
ref
ore
,ef
fec
ti
ver
isk
ma
nage
mentof
fer
sthepot
ent
ia
ltor
educ
ebot
hthepos
sibi
li
tyofar
iskoc
cur
ri
nga
ndi
ts
pot
ent
ia
limpa
ct.

I
nbus
ine
ss,r
iskma
nage
menti
sde
fine
dast
hepr
oce
ssofi
dent
if
ying,moni
tor
inga
ndma
nagi
ng
pot
ent
ia
lri
sksi
nor
dert
omi
nimi
zet
hene
gat
ivei
mpa
ctt
heyma
yha
veona
nor
gani
zat
ion.
Exa
mpl
esofpot
ent
ia
lri
sksi
ncl
udes
ecur
it
ybr
eac
hes
,da
tal
oss
,cybe
r-a
tt
acks
,sys
temf
ail
ure
s
a
ndna
tur
aldi
sas
ter
s.Ane
ffe
cti
ver
iskma
nage
mentpr
oce
sswi
llhe
lpi
dent
if
ywhi
chr
isk
spos
e
t
hebi
gge
stt
hre
att
oanor
gani
zat
iona
ndpr
ovi
degui
del
ine
sforha
ndl
ingt
hem.Or
gani
zat
ions
ma
nager
isksonada
il
yba
sis
.Ther
iskma
nage
mentpr
oce
ssi
soneoft
hemos
timpor
tanta
spe
cts
ofa
nyc
ompa
nybe
caus
eitde
alswi
tht
hes
ecur
it
yofa
llt
heda
tapr
ese
nti
ntheor
gani
zat
ion
.

Ri
skc
anc
omef
rombot
hint
erna
lande
xte
rna
lsour
ces
.Thee
xte
rna
lri
sksa
ret
hos
etha
tar
enot
i
ndi
rec
tcont
roloft
hema
nage
ment
.The
sei
ncl
udepol
it
ic
ali
ssue
s,e
xcha
nger
ate
s,i
nte
res
tra
tes
,
a
nds
oon.I
nte
rna
lri
sks
,ont
heot
herha
nd,i
ncl
udenon-
compl
ia
nceori
nfor
mat
ionbr
eac
hes
,
a
mongs
eve
ralot
her
s.

Ri
skma
nage
menti
simpor
tanti
nanor
gani
zat
ionbe
caus
ewi
thouti
t,af
ir
mca
nnotpos
sibl
y

1
de
finei
tsobj
ect
ive
sfort
hef
utur
e.I
fac
ompa
nyde
fine
sobj
ect
ive
swi
thoutt
aki
ngt
her
isksi
nto
c
ons
ide
rat
ion,c
hanc
esa
ret
hatt
heywi
lll
osedi
rec
ti
ononc
eanyoft
hes
eri
skshi
thome
.

I
nre
centye
ars
,ma
nyc
ompa
nie
sha
vea
dde
dri
skma
nage
mentde
par
tme
ntst
othe
irt
eam.The
r
oleoft
hist
eami
stoi
dent
if
yri
sks
,comeupwi
ths
tra
tegi
est
ogua
rda
gai
nstt
hes
eri
sks
,to
e
xec
utet
hes
est
rat
egi
es,a
ndt
omot
iva
tea
llme
mbe
rsoft
hec
ompa
nyt
ocoope
rat
eint
hes
e
s
tra
tegi
es.La
rge
ror
gani
zat
ionsge
ner
all
yfa
cemor
eri
sks
,sot
hei
rri
skma
nage
ments
tra
tegi
es
a
lsone
edt
obemor
esoph
ist
ic
ate
d.Al
so,t
her
iskma
nage
mentt
eami
sre
spons
ibl
efora
sse
ssi
ng
e
achr
is
kandde
ter
mini
ngwhi
choft
hema
rec
rit
ic
alf
ort
hebus
ine
ss.Thec
rit
ic
alr
isksa
ret
hos
e
t
hatc
oul
dha
vea
nadve
rsei
mpa
ctont
hebus
ine
ss;t
hes
eshoul
dthe
nbegi
veni
mpor
tanc
eand
s
houl
dbepr
ior
it
iz
ed.Thewhol
egoa
lofr
iskma
nage
menti
stoma
kes
uret
hatt
hec
ompa
nyonl
y
t
ake
sther
iskst
hatwi
llhe
lpi
tac
hie
vei
tspr
ima
ryobj
ect
ive
swhi
leke
epi
nga
llot
herr
isksunde
r
c
ont
rol
.

Duet
othepr
eva
il
ingf
ocu
sonr
isk,r
iskma
nage
mentj
obsha
veope
nedup.Ri
skma
nage
ment
j
obsa
reus
ual
lyc
ons
ide
reda
sfi
nanc
ialc
are
ersbe
caus
emos
toft
her
iskst
hatbus
ine
sse
sfa
cea
re
c
los
elyt
ie
dtot
hec
ompa
ny’
sfi
nanc
ials
tandi
ng.

 Ri
skma
nage
menti
sthepr
oce
ssofi
dent
if
ica
ti
on,a
nal
ysi
s,a
nda
cce
pta
nceormi
ti
gat
ion
ofunc
ert
ai
ntyi
ninve
stme
ntde
cis
ions
.
 Ri
ski
sins
epa
rabl
efr
omr
etur
nint
hei
nve
stme
ntwor
ld.

 Ava
rie
tyoft
act
ic
sexi
stt
oas
cer
tai
nri
sk;oneoft
hemos
tcommoni
sst
anda
rdde
via
tion,
as
tat
is
ti
calme
asur
eofdi
spe
rsi
ona
roundac
ent
ralt
ende
ncy.

 Be
ta,a
lsoknowna
sma
rke
tri
sk,i
same
asur
eoft
hevol
at
il
it
y,ors
yst
ema
ti
cri
sk,ofa
n
i
ndi
vidua
lst
ocki
ncompa
ris
ont
othee
nti
rema
rke
t.

 Al
phai
same
asur
eofe
xce
ssr
etur
n;mone
yma
nage
rswhoe
mpl
oya
cti
ves
tra
tegi
est
o
be
att
hema
rke
tar
esubj
ectt
oal
phar
isk.

2
1.
1Thebe
nef
it
sandc
hal
lenge
sofr
iskma
nage
ment

Ef
fec
ti
vel
yma
nagi
ngr
iskst
hatc
oul
dha
veane
gat
iveorpos
it
ivei
mpa
ctonc
api
ta
lande
arni
ngs
br
ingsma
nybe
nef
it
s.I
tal
sopr
ese
ntsc
hal
le
nge
s,e
venf
orc
ompa
nie
swi
thma
tur
eGRC
s
tra
tegi
es.

1.
1.1Be
nef
it
sofRi
skManage
ment:
 Est
abl
is
hpr
oce
dure
stoavoi
dpot
ent
ia
lthr
eat
sandmi
nimi
zet
hei
rimpa
cts
houl
dth
ey
oc
cura
ndc
opewi
tht
her
esul
ts
.
 Conf
ide
nti
nbus
ine
ssde
cis
ionsbe
caus
eor
gani
zat
ionsunde
rst
andt
hea
ssoc
iat
edr
isksa
nd
howt
opr
eve
ntt
hem.
 Cor
por
ategove
rna
ncepr
inc
ipl
est
hatf
ocuss
pec
ifi
cal
lyonr
iskma
nage
mentc
anhe
lpa
c
ompa
nyr
eac
hthe
irgoa
ls.
 Cr
eat
esas
afea
nds
ecur
ewor
kenvi
ronme
ntf
orbot
hst
affa
swe
lla
scus
tome
rs.
 De
cre
ase
sle
gall
ia
bil
it
ywhi
lei
ncr
eas
ings
tabi
li
tyofbus
ine
ssope
rat
ions
.
 Pr
ote
cti
onf
romde
tri
ment
ale
vent
s.
 He
lpse
sta
bli
shas
oli
dins
ura
ncepl
ana
ndi
dent
if
yins
ura
ncene
edsf
orpr
ote
cti
on
buta
lsot
osa
veoni
nsur
anc
epr
emi
ums

1.
1.2Cha
lle
nge
sRi
skMa
nage
mentTe
amsShoul
dExpe
ctt
oEnc
ount
er:
 Expe
ndi
tur
esgoupi
nit
ia
ll
y,a
sri
skma
nage
mentpr
ogr
amsc
anr
equi
ree
xpe
nsi
ves
oft
war
e
a
nds
ervi
ces
.

 Thei
ncr
eas
ede
mpha
sisongove
rna
ncea
lsor
equi
resbus
ine
ssuni
tst
oinve
stt
imea
ndmone
y
t
ocompl
y.

 Re
achi
ngc
ons
ens
usont
hes
eve
rit
yofr
iska
ndhowt
otr
eati
tca
nbeadi
ff
icul
tand
c
ont
ent
iouse
xer
cis
ean
dsome
ti
mesl
eadt
ori
ska
nal
ysi
spa
ral
ysi
s.

 De
mons
tra
ti
ngt
heva
lueofr
iskma
nage
mentt
oexe
cut
ive
swi
thoutbe
inga
blet
ogi
vet
hem
ha
rdnumbe
rsi
sdi
ff
icul
t.

3
1.
2Pr
oce
ssofRi
skMa
nage
ment
Nor
isk,noga
in–i
tisauni
ver
salt
rut
h.So,i
fyouwa
ntt
obeas
ucc
ess
,youha
vet
ota
kear
isk.
Wor
ldFi
nanc
esugge
stst
hedi
ff
ere
ntt
ype
sofe
ntr
epr
ene
urst
oide
nti
fy,pr
ior
it
iz
e,a
nde
val
uat
e
bus
ine
ssr
isks
.Whe
nama
nage
rde
signsapr
oje
ct,i
tisc
all
edr
iskma
nage
ment
.Ri
sk
ma
nage
mentma
nage
sthr
oughapr
oce
ss.Thi
spr
oce
ssna
mei
sthepr
oce
ssofr
iskma
nage
ment
.
I
tisoneki
ndofs
yst
emi
cpr
oce
dur
etha
texpl
ai
nshowt
oide
nti
fya
ndf
acet
her
isk.The
rea
re
f
ourke
yel
eme
nts
.Suc
has
:-
Proc
ess
,Int
egr
ati
on,Cul
tur
e,I
nfr
ast
ruc
tur
e.The
see
leme
ntsa
re
f
lexi
ble
.Or
gani
zat
iona
lst
ruc
tur
e,r
iskpr
ofi
le
,ma
nage
ria
lst
rat
egy,a
ndope
rat
iona
lphi
los
ophy
va
ryt
hebus
ine
ss’
scompl
exi
ty.

1.
2.1Si
gni
fi
canc
eint
hePr
oce
ssofRi
skMa
nage
ment
Thepr
oce
ssofar
iskma
nage
mentpl
ani
ses
sent
ia
l.Be
caus
eite
mpowe
rsac
ompa
nywi
tht
he
ne
ces
sar
ytool
s,t
hes
etool
sre
all
yhe
lpi
dent
if
ythepot
ent
ia
lri
sk.Onc
eama
nage
rca
nide
nti
fy
t
her
isk,hec
ane
asi
lymi
ti
gat
eit
.Add
iti
ona
ll
y,t
her
is
kma
nage
mentove
rvi
ewpr
oce
ssf
ind
sout
abus
ine
sswi
thagr
oundupt
hatc
ant
akeupaqua
li
tyde
cis
ionpr
epa
ring.
Ma
nage
menta
nda
sse
ssme
ntofr
isksa
ret
hebe
stc
our
seofa
cti
ont
oma
kef
ort
hebus
ine
ss
i
nci
dent
.Itma
yhe
lpt
oope
nawa
yofgr
owt
handpr
ogr
ess
.Whe
nac
ompa
nye
val
uat
est
he
pot
ent
ia
lri
sksc
oll
ect
edbyt
her
iskma
nage
mentc
ycl
e,i
timpr
ove
sst
ruc
tur
est
oaddr
esst
hem.I
t
de
vel
opsa
ndbe
come
sthes
ucc
essoft
hee
nti
ty.Addi
ti
ona
ll
y,t
hes
uppl
ycha
inr
iskma
nage
ment
c
ycl
eforf
ede
ralf
aci
li
ti
es;ve
rif
iesr
isksofahi
ghpr
ior
it
yar
ede
altwi
tha
sbe
ll
ige
renta
s
a
tt
ai
nabl
e.Be
side
s,ma
nage
mentr
equi
rese
noughi
nfo
rma
ti
ont
oma
kepr
ope
rde
cis
ionsa
nd
ma
kingpr
ofi
ts
.

1.
2.2NeedforRis
kMa na
gementPr
ocess
Al
lproj
ectmanage
rsa
ndteammembersne
edt
ole
arnhowt
oimpl
eme
ntne
ces
sar
y
a
nds
yst
ema
ti
cri
skma
nage
men
tpr
oce
sse
s.Th
iswi
lle
nab
let
hee
nti
reor
gani
zat
iont
o
r
unt
hei
rpr
oje
ctsi
namuc
hsmo
othe
rma
nne
rint
hef
oll
owi
ngwa
ys:
 I
mpr
ovea
llr
esour
cepl
anni
ngbypr
edi
ct
ingf
utur
ecos
ts
 I
mpr
ovehowc
ompa
nie
str
ackpr
oje
ctc
ost
s

4
  I
mpr
ovet
hea
ccur
acyofe
sti
mat
esofROI
 Amor
efl
exi
bler
espons
etoa
llf
utur
echa
ll
enge
s

1.
3Fi
vema
ins
tepsi
nther
iskma
nage
mentpr
oce
ss

The
rea
ref
ivema
ins
tepsi
nther
iskma
nage
mentpr
oce
sst
hator
gani
zat
ionss
houl
dfol
low,
whi
chi
ncl
uder
iski
dent
if
ica
ti
on,i
tsa
nal
ysi
s,e
val
uat
iona
ndt
rea
tme
nt,a
ndf
ina
ll
y,c
ons
tan
t
moni
tor
ingoft
her
isk.The
ses
tepsa
redi
scus
sedi
nde
tai
lint
hea
rti
cl
ebe
low:

1.
3.1I
dent
if
yingt
heRi
sk
Thef
ir
sts
tepi
nas
ucc
ess
fulr
iskma
nage
mentpr
oce
ssi
stoi
dent
if
ythet
ypeofr
iskt
he
or
gani
zat
ioni
scur
rent
lyde
ali
ngwi
thorc
oul
dde
alwi
thi
nthef
utur
e.I
the
lpst
ofor
mul
at
e
e
ffe
cti
ver
isk-
res
pons
ivei
nit
ia
ti
ves
.Asar
esul
t,t
hee
nti
reor
gani
zat
ionc
ons
ide
rst
hef
oll
owi
ng
a
tt
ri
but
ions
.Fori
nst
anc
e-

5
Thepos
it
ive
,st
ronge
ffe
cti
on
Thef
actofs
ome
thi
ng’
sli
kel
y.
Ni
cel
yac
cel
era
ti
on,Fi
rmne
ssofpur
pos
e

Someoft
hedi
ff
ere
ntt
ype
sofr
isksi
ncl
ude
:
 St
rat
egi
cri
sk

 Compl
ia
ncer
isk

 Ma
rke
tri
sk

 Re
gul
at
oryr
isk

 Ope
rat
iona
lri
sk

I
tisi
mpor
tantt
oide
nti
fya
llt
hedi
ff
ere
ntpot
ent
ia
ltyp
esofr
iskst
hatt
heor
gani
zat
ionc
anf
ace
.
The
ser
isksc
anbenot
eddownma
nua
ll
ybuti
fthe
rei
sar
iskma
nage
mentpl
at
for
mimpl
eme
nte
d
i
ntheor
gani
zat
ion,t
her
iski
dent
if
ica
ti
onpr
oce
ssbe
come
sal
ots
impl
er.Thega
the
red
i
nfor
mat
ioni
sdi
rec
tl
yins
ert
edi
ntot
hes
yst
em.

Ac
ces
stot
hisda
taa
lsobe
come
sal
ots
impl
erbe
caus
ethepr
oje
ctma
nage
rsa
ndot
hert
eam
me
mbe
rsdonotha
vet
ore
que
sta
nema
ilf
ort
hisi
nfo
rma
ti
on.The
yca
ndi
rec
tl
ylogi
ntot
her
isk
ma
nage
ments
yst
ema
nds
eea
llt
hei
dent
if
iedr
isks
.

1.
3.2Ana
lyz
ingt
heRi
sk
Al
lthepos
sibl
eri
sksf
ort
heor
gani
zat
ionha
vebe
eni
dent
if
iedi
nthepr
evi
ouss
tep,whi
chwi
ll
l
eadt
het
eamst
oana
lyz
eth
eser
isks
.Ther
iska
nal
ysi
sshoul
dans
wert
hef
oll
owi
ngque
sti
ons
:

 Wha
tist
hel
ike
li
hoodoft
hes
eri
sksoc
cur
ri
ng?

 Wha
twi
llbet
hec
ons
eque
nce
soft
hes
eri
skst
otheor
gani
zat
ion?

Dur
ingt
her
iska
nal
ysi
spr
oce
ss,t
eamse
sti
mat
ethepr
oba
bil
it
yofe
achr
iskoc
cur
ri
nga
ndi
ts
f
all
outt
opr
ior
it
iz
ethei
dent
if
iedr
isks
.

Thef
act
orst
hatc
ompa
nie
scons
ide
rwhe
npr
ior
it
iz
ingt
her
isksi
ncl
ude
:

 Pot
ent
ia
lfi
nanc
iall
oss

6
  Ti
mel
ost

 Thes
eve
rit
yoft
hei
mpa
ct

 Ava
il
abi
li
tyofr
eso
urc
est
oma
naget
her
isk

Ri
ska
nal
ysi
she
lpsc
ompa
nie
scr
eat
ethe
irr
espons
etot
hes
eri
sksde
pendi
ngont
hei
rse
ver
it
y.I
t
a
lsohe
lpsi
nunde
rst
andi
ngt
hel
inkbe
twe
ent
her
iska
ndt
henumbe
rofa
spe
ctsoft
hebus
ine
ssi
t
wi
lla
ffe
ct.Toputi
tsi
mpl
ythemor
ebus
ine
ssa
spe
ctsa
tri
sk,t
hehi
ghe
rther
iskt
oan
or
gani
zat
ion.

I
fcompa
nie
sus
eama
nua
lri
skma
nage
mentpr
oce
ss,t
hent
hisr
iska
nal
ysi
sta
kespl
acema
nua
ll
y.
I
far
iskma
nage
ments
olut
ioni
sde
plo
yeda
cros
stheo
rga
niz
ati
on,t
hendi
ff
ere
ntdoc
ume
nts
,
pol
ic
ies
,pr
oce
sse
s,a
ndpr
oce
dur
esa
rea
nal
yze
dbyt
hes
olut
iont
oma
pther
iska
ndc
rea
tea
f
rame
wor
kfort
hene
xts
tep
,whi
chi
sri
ske
val
uat
ion.

1.
3.3Eva
lua
tingt
heRi
sk
Af
terc
ompl
et
ingat
hor
ougha
nal
ysi
sofr
isks
,the
yne
edt
ober
anke
dinor
derofs
eve
rit
yand
t
henpr
ior
it
iz
ed.Whe
ncompa
nie
sus
ear
iskma
nage
ments
olut
ion,t
heya
lre
adyha
vedi
ff
ere
nt
c
ate
gor
iesofr
isksi
n-bui
lti
ntot
hes
olut
ion,whi
chc
ate
gor
ize
sther
iskba
sedoni
tss
eve
rit
y.

Ar
iskc
aus
ingmi
nori
nconve
nie
ncet
otheor
gani
zat
ionge
tsal
owr
ati
ng,whe
rea
sri
skst
hatc
an
ha
veabi
gimpa
ctonope
rat
ionsi
scons
ide
redt
obehi
ghr
isk.Lowr
isksdonotne
ces
sar
il
yne
ed
i
nte
rve
nti
onf
romuppe
rma
nage
ment
,buthi
ghr
isksr
equi
rei
mme
dia
tei
nte
rve
nti
on.

Whe
nor
gani
zat
ionsus
eri
skma
nage
mentpl
at
for
ms,t
heyc
anhe
lpi
nide
nti
fyi
ngdi
ff
ere
nt
wor
kabl
esol
uti
onsf
ore
achr
iskt
hatt
hee
nte
rpr
isec
oul
dfa
ce.Thi
swa
yal
lthepr
oje
ctsi
nthe
or
gani
zat
iona
ndpr
oce
sse
sca
ngoonuni
nte
rrupt
eda
ndwi
thouta
nyde
lay.

1.
3.4Tr
eat
ingt
heRi
sk
Onc
ether
isksha
vebe
ena
nal
yze
dandpr
ior
it
iz
ed,i
tist
imet
ota
kea
cti
on.Eve
ryr
iskt
oth
e
or
gani
zat
ionort
hepr
oje
ctne
edst
oei
the
rbee
li
mina
tedorc
ont
ai
ned.I
fther
iskt
rea
tme
nti
s
donema
nua
ll
y,t
eamme
mbe
rsne
edt
ocont
acte
achs
take
hol
dert
odi
scus
sthei
ssue
s.Us
ual
ly,
t
hes
edi
scus
sionsge
tspr
eadoutove
rema
ilc
hai
ns,va
riousdoc
ume
nts
,andma
nyphonec
all
s,
ma
kingt
hee
nti
repr
oce
ssl
onge
randmor
edi
ff
icul
t.
.

7
Whe
ncompa
nie
sempl
oyar
iskma
nage
ments
olut
ion,t
hes
take
hol
der
sar
eimme
dia
tel
ynot
if
ied
byt
hea
ppl
ic
ati
on,a
nda
llt
heke
yde
cis
ionsa
rema
dei
nonego.Thi
swa
yitbe
come
sea
syt
o
moni
tort
hepr
ogr
essoft
hes
olut
ion.

Onea
spe
ctofe
ffe
cti
vel
ytr
eat
ingt
her
iski
sthee
ffi
ci
entus
ageofr
esour
ceswi
thoutl
osi
ngt
he
pr
ogr
essma
dei
nthea
cti
vepr
oje
cts
.Ove
rti
me,or
gan
iza
ti
onsc
anc
rea
teal
ogofa
llt
hepr
oje
cts
,
t
her
isksf
ace
d,a
ndt
hemi
ti
gat
ionpr
oce
ss.Thi
swi
llh
elpi
nant
ic
ipa
ti
ngr
isksi
nthef
utur
eso
t
hatt
het
eamme
mbe
rsc
anbepr
oac
ti
vei
nthe
irr
iskma
nage
ments
tra
tegy.,a
fte
rse
lec
ti
ngr
isk
r
espons
etype
sinpr
oje
ctma
nage
men
t,t
heor
gani
zat
iont
ri
est
oide
nti
fyaga
pinr
isk
ma
nage
mentc
apa
bil
it
ie
s.Whe
nthe
yar
eabl
e,t
heyde
vel
opt
hos
eca
pabi
li
ti
est
oimpl
eme
ntt
he
ne
ces
sar
yri
skr
espons
e.Thus
,themi
ti
gat
ions
tepbui
ldsup.

Someoft
hec
ommonwa
ysofmi
ti
gat
ingr
iski
ncl
ude
:

 Ac
cept
ingt
her
isko
fthepr
oje
ct,whi
chme
ansunde
rst
andi
ngt
her
iski
tpos
esbut
r
eal
iz
ingt
hatt
hebe
nef
it
sout
wei
ght
hene
gat
iveout
come
soft
her
isk

 Avoi
dingt
her
iski
nthepr
oje
ct,whe
ret
eamme
mbe
rss
impl
ydonotpa
rti
ci
pat
eina
n
a
cti
vit
ytha
tcoul
dle
adt
opot
ent
ia
lri
sk

 Cont
rol
li
ngt
her
isk,whe
ret
eamme
mbe
rsmi
ti
gat
ether
iskbyr
educ
ingt
hel
ike
li
hoodof
i
tsoc
cur
renc
etor
educ
ethei
mpa
ctbe
for
eha
nd

 Tr
ans
fer
ri
ngt
her
isk,whe
reor
gani
zat
ionsge
tat
hir
dpa
rtyi
nvol
ved(
suc
hasi
nsur
anc
e)
t
ota
ker
espons
ibi
li
tyf
ort
her
iski
nca
sei
toc
cur
s

1.
3.4Moni
tor
inga
ndRe
vie
wingt
heRi
sk
Or
gani
zat
ionswi
llnot
ic
eove
rti
met
hatt
her
ewi
llbes
omer
iskst
hatc
annotbee
li
mina
teda
nd
wi
llbeomni
pre
sent
.The
sec
ont
inuou
sri
sksc
ani
ncl
udee
xte
rna
lri
skss
ucha
sma
rke
tri
sksa
nd
e
nvi
ronme
nta
lri
sks
.The
yne
edt
obec
ont
inuous
lymo
nit
ore
dtoma
ket
hemi
ti
gat
ionpr
oce
ss
mor
eef
fec
ti
ve.

Whe
ncompa
nie
sempl
oyr
iskma
nage
ments
olut
ions
,thes
yst
embe
come
sre
spons
ibl
efor
moni
tor
ingt
heor
gani
zat
ion’
scompl
et
eri
skf
rame
wor
k.I
fthe
rei
sanyc
hange
,al
lre
leva
nt
pa
rti
esge
tnot
if
iedi
mme
dia
tel
y.Thi
sal
soe
nsur
esc
ont
inui
ty.Whe
nempl
oye
esa
repr
ope
rly
t
rai
nedi
nthepr
oce
sse
s,t
heyc
anus
ethes
yst
eme
ffi
ci
ent
ly.

8
1.
4Howt
obui
lda
ndi
mpl
eme
ntar
iskma
nage
mentpl
an
Ar
iskma
nage
mentpl
ande
scr
ibe
showa
nor
gani
zat
ionwi
llma
nager
isk.I
tla
ysoute
leme
nts
s
ucha
stheor
gani
zat
ion'
sri
ska
ppr
oac
h,r
ole
sandr
espons
ibi
li
ti
esoft
her
iskma
nage
mentt
eams
,
r
esour
cesi
twi
llus
etoma
nager
isk,pol
ic
iesa
ndpr
oce
dur
es.

I
SO31000'
sse
ven-
ste
ppr
oce
ssi
sau
sef
ulgui
det
ofo
llow,a
ccor
dingt
oWi
tt
e.He
rei
sa
r
undownofi
tsc
ompone
nts
:

1.Communi
cat
iona
ndc
ons
ult
ati
on.Si
ncer
ais
ingr
iska
war
ene
ssi
sane
sse
nti
alpa
rtofr
isk
ma
nage
ment
,ri
skl
eade
rsmus
tal
sode
vel
opac
ommuni
cat
ionpl
ant
oconve
ythe
or
gani
zat
ion'
sri
skpol
ic
iesa
ndpr
oce
dur
est
oempl
oye
esa
ndr
ele
vantpa
rti
es.Thi
sst
eps
ets
t
het
onef
orr
iskde
cis
ionsa
teve
ryl
eve
l.Thea
udi
enc
einc
lude
sanyonewhoha
sani
nte
res
t
i
nhowt
heor
gani
zat
iont
ake
sadva
nta
geofpos
it
iver
isksa
ndmi
nimi
zesne
gat
iver
isk.

2.Es
tabl
is
hingt
hec
ont
ext
.Thi
sst
epr
equi
resde
fini
ngt
heor
gani
zat
ion'
suni
quer
iska
ppe
ti
te
a
ndr
iskt
ole
ranc
e--i
.e
.,t
hea
mountt
owhi
chr
iskc
anva
ryf
romr
iska
ppe
ti
te
.Fa
ctor
sto
c
ons
ide
rhe
rei
ncl
udebus
ine
ssobj
ect
ive
s,c
ompa
nyc
ult
ure
,re
gul
at
oryl
egi
sl
at
ion,pol
it
ic
al
e
nvi
ronme
nt,e
tc.

3.Ri
ski
dent
if
ica
tion.Thi
sst
epde
fine
sther
isks
cena
riost
hatc
oul
dha
veapos
it
iveorne
gat
ive
i
mpa
ctont
heor
gani
zat
ion'
sabi
li
tyt
oconduc
tbus
ine
ss.Asnot
eda
bove
,ther
esul
ti
ngl
is
t
s
houl
dber
ecor
dedi
nar
iskr
egi
st
era
ndke
ptupt
oda
te.

4.Ri
ska
nal
ysi
s.Thel
ike
li
hooda
ndi
mpa
ctofe
achr
iski
sana
lyz
edt
ohe
lps
ortr
isks
.Ma
king
ar
iskhe
atma
pca
nbeus
efulhe
re,a
sitpr
ovi
desavi
sua
lre
pre
sent
at
ionoft
hena
tur
eand
i
mpa
ctofac
ompa
ny'
sri
sks
.Ane
mpl
oye
eca
ll
ingi
nsi
ck,f
ore
xampl
e,i
sahi
gh-
proba
bil
it
y
e
ventt
hatha
sli
tt
leorn
oimpa
ctonmos
tcompa
nie
s.Ane
art
hqua
ke,de
pendi
ngonl
oca
ti
on,
i
sane
xampl
eofal
ow-
proba
bil
it
yri
skwi
thhi
ghi
mpa
ct.Thequa
li
ta
tivea
ppr
oac
hma
ny
or
gani
zat
ionsus
etor
atet
hel
ike
li
hooda
ndi
mpa
ctofr
isksmi
ghtbe
nef
itf
romamor
e
qua
nti
ta
ti
vea
nal
ysi
s,Wi
tt
esa
id.TheFAI
RIns
ti
tut
e,apr
ofe
ssi
ona
las
soc
iat
iont
hatpr
omot
es

9
 t
heFa
ctorAna
lys
isofI
nfor
mat
ionRi
skf
rame
wor
konc
ybe
rse
cur
it
yri
sks
,ha
sexa
mpl
esof
t
hel
at
te
rappr
oac
h.

5.Ri
ske
val
uat
ion.He
rei
swhe
reor
gani
zat
ionsde
ter
minehowt
ore
spondt
other
iskst
heyf
ace
.
Te
chni
que
sinc
ludeoneormor
eoft
hef
oll
owi
ng:

o Ri
ska
voi
danc
e:Th
eor
gani
zat
ions
eekst
oel
imi
nat
e,wi
thdr
awf
romornotbei
nvol
ved
i
nthepot
ent
ia
lri
sk.

o Ri
skmi
ti
gat
ion:Th
eor
gani
zat
iont
ake
sac
ti
onst
oli
mitoropt
imi
zear
isk.

o Ri
sks
har
ingort
rans
fer
:Theor
gani
zat
ionc
ont
rac
tswi
that
hir
dpa
rty(
e.g.
,ani
nsur
er)t
o
be
ars
omeora
llc
ost
sofar
iskt
hatma
yorma
ynotoc
cur
.

o Ri
ska
cce
pta
nce
:Ar
iskf
all
swi
thi
ntheor
gan
iza
ti
on'
sri
ska
ppe
ti
tea
ndt
ole
ranc
eandi
s
a
cce
pte
dwi
thoutt
aki
nga
cti
on.

6.Ri
skt
rea
tme
nt.Thi
sst
epi
nvol
vesa
ppl
yingt
hea
gre
ed-
uponc
ont
rol
sandpr
oce
sse
sand
c
onf
ir
mingt
heywor
kaspl
anne
d.

7.Moni
tor
inga
ndr
evi
ew.Ar
ethec
ont
rol
swor
kinga
sint
ende
d?Ca
nthe
ybei
mpr
ove
d?
Moni
tor
inga
cti
vit
ie
sshoul
dme
asur
eke
ype
rfor
manc
eindi
cat
orsa
ndl
ookf
orke
yri
sk
i
ndi
cat
orst
hatmi
ghtt
ri
gge
rac
hangei
nst
rat
egy.

10
1.
5Conc
lus
ion
Forabus
ine
ss,a
sse
ssme
nta
ndma
nage
mentofr
isksi
sthebe
stwa
ytopr
epa
ref
ore
vent
ual
it
ie
s
t
hatma
ycomei
nthewa
yofpr
ogr
essa
ndgr
owt
h.

Whe
nabus
ine
sse
val
uat
esi
tspl
anf
orha
ndl
ingpot
ent
ia
lthr
eat
sandt
hende
vel
opss
truc
tur
est
o
a
ddr
esst
hem,i
timpr
ove
sit
soddsofbe
comi
ngas
ucc
ess
fule
nti
ty.

I
fandwhe
nri
sksa
ris
e,t
heor
gani
zat
ionwi
llbepr
epa
redt
oha
ndl
ethes
it
uat
iona
ndbounc
eba
ck
wi
thl
it
tl
eornoi
mpa
ctf
romt
hee
ven
t.

Theba
sicpr
oce
sse
sofr
iskma
nage
ments
tayt
hes
ame
,re
gar
dle
ssofwhe
the
rthec
ompa
nydoe
s
i
tdi
git
al
lyorma
nua
ll
y.Al
lcompa
nie
s,r
ega
rdl
essoft
hei
rsi
ze,f
acer
isks
,andt
heyne
edt
o
s
ucc
ess
ful
lyi
dent
if
y,e
val
uat
e,t
rac
k,a
ndmi
ti
gat
ether
iskst
heyf
acec
urr
ent
lya
ndi
nthef
utur
e
t
oimpr
ovet
hei
rpr
oce
sse
sfort
hei
rpr
oje
cts
.

11
1.
6Re
fer
enc
e

12