Risk Management Concepts and Principles Quiz

Opening Prayer

• Expresses gratitude for a wonderful day and blessings of family.
• Seeks forgiveness for sins, offering forgiveness to those who have sinned against.
• Requests guidance in learning new knowledge, values, and skills.
• Asks for joy, meaningful experiences and productive work.
• Prays for God's grace and love.
• Ends with "Amen."

Risk Management Concepts and Principles

• Objectives:
  • Gain foundational knowledge of risk management.
  • Understand risk management elements.
  • Recognize the significance of risk management plans, considering potential risks before they occur.
  • Understand risk management framework benefits.
  • Appreciate the principles of risk management.
  • Comprehend the risk management process.

What is Risk Management?

• The process of identifying, assessing, and controlling threats to an organization's capital and earnings.
• Threats stem from various sources, including financial uncertainty, legal liabilities, strategic management errors, accidents, and natural disasters.

Risk Defined

• The possibility of something bad happening.
• Involves uncertainty regarding the implications of an activity concerning valued aspects like health, well-being, wealth, property, or the environment.
• Often focuses on negative or undesirable consequences.
• The international standard definition is "effect of uncertainty on objectives."

Risk (UNWTO Definition)

• A situation exposing someone or something to danger, harm, or loss.
• Can encompass physical safety matters, property loss, financial risks, and more.
• Risk attaches from the moment a person engages in business (sole proprietorship, partnership, or corporation).

Example: Food Handling

• Food handling requires careful attention to prevent contamination and food poisoning.
• Government regulations ensure businesses follow safety standards.
• Food sanitation permits are mandated for food industry businesses.

Example: Tourism and Hospitality

• Obtaining guest and clientele information is crucial for security in tourism and hospitality.
• Information gathering is considered a risk itself that requires safeguarding.

What is Hazard?

• Defined as a potential source of harm.
• Substances, events, or circumstances create hazards if they could realistically cause damage to health, life, property, or value.
• Probability of harm combined with potential harm magnitude creates risk.

Risk vs. Hazard

• Hazard: Refers to any source of potential damage, harm, or adverse health effects for something or someone.
• Risk: Refers to the chance or probability that someone will experience harm or an adverse health effect, property loss, or harmful environmental effects from encountering a hazard.

Benefits of a Risk Management Framework

• Enables the identification of threats and opportunities for an agency.
• Improves and informs the planning process.
• Reduces the likelihood of costly surprises.
• Contributes to improved resource allocation.
• Improves efficiency and performance.
• Improves accountability.
• Encourages continuous improvement.

Risk Management Framework - ISO 31000:2009

• A structured framework for risk management.

Seven Key Questions

• What are we trying to achieve?
• What events or circumstances could affect achieving our objectives?
• What are the consequences?
• How likely are these events?
• What can we do to manage these outcomes?
• How do we maximize opportunities?
• Can the organization recover if a risk eventuates?

Principles of Risk Management

• ISO principles:
  • The process creates value.
  • Integral part of the organizational process.
  • Part of the decision-making process.
  • Explicitly addresses uncertainty.
  • Systematic and structured.
• Additional principles for dynamic, adaptable and inclusive processes.
  • Transparency and inclusivity.
  • Adaptability and change response.
  • Continuous monitoring and improvement.
  • Core principles alignment using best available information.
  • Tailoring to specific projects.
  • Acknowledging human factors.

Risk Management Process

• Identification: Brainstorming to list all possible risks.
• Planning: Develop contingency plans and implement controls.
• Derive Safeguards: Incorporate 'fallbacks' in the project plan to address potential risks.
• Monitor: Continuously track risks, both anticipated and unforeseen.

Content of a Typical Risk Management Plan

• Risk management policy statement.
• Scope and objectives.
• Consistent language and definitions.
• Integration with other practices.
• Risk assessment criteria.
• Internal/external context description.
• Analyzed risk list.
• Risk treatment plan summary.
• Risk reporting protocol outline.
• Monitoring and review program outline.

Embedding Risk Management

• Risk management should be integrated into all organizational practices and processes.
• Should be relevant, effective, and efficient.
• Embedded within policy development, business and strategic planning, and change management processes.