Introduction To Risk Management PDF

UNIT 1: INTRODUCTION TO RISK MANAGEMENT What is a Risk? The possibility that something bad or unpleasant will happen. The potential of a situation or event to impact on the achievement of specific objectives.  WHAT IS RISK MANAGEMENT? RISK MANAGEMENT is a process that allows indivi...

UNIT 1: INTRODUCTION TO RISK MANAGEMENT What is a Risk? The possibility that something bad or unpleasant will happen. The potential of a situation or event to impact on the achievement of specific objectives.  WHAT IS RISK MANAGEMENT? RISK MANAGEMENT is a process that allows individual risk events and overall risk to be understood and managed proactively, optimizing success by minimising threats and maximising opportunities and outcomes. APM Body of Knowledge, 7th Edition ISO 31000 : 2009 ISO 31000 is an international standard issued in 2009 by the ISO (International Organization for Standardization) A guide for the design, implementation, and maintenance of risk management. Assists organizations in establishing, implementing, operating, maintaining, and continually improving their risk management framework. Risk assessment: Risk assessment is the overall process of risk identification, analysis and evaluation.  1. Communication and Consultation Communication and consultation with external and internal stakeholders should take place during all stages of the risk management process. For example: Introducing a new product in the restaurant menu Surveys for your external stakeholders (customers, suppliers) Meetings with the management team and staff Consultation to experts (lawyers, analysts, accountants, etc.) Resource: Professional Evaluation and Certification Board (PECB) University  2. Establishing the Context The organization articulates its objectives, defines the external and internal parameters to be taken into account when managing risk, and sets the scope and risk criteria for the remaining process. For example: Introducing an African-Portugeuse themed product in the restaurant menu Resource: Professional Evaluation and Certification Board (PECB) University 1. Objectives: To widen options of customers for a full-meal course whose preference is in lined with the store theme; increase sales by the end of the year at 20% vs. previous year. 2. External and Internal Parameters: a. Is it acceptable by your target market? (demand, buying power) b. Is the store prepared for the supplies needed (product launch, marketing and promotion) c. Are the staffs well-trained and in place? Resource: Professional Evaluation and Certification Board (PECB) University 3. Risk Assessment Risk assessment is the overall process of risk identification, analysis and evaluation. 3.1. Risk Identification - the organization should identify risk sources, areas of impacts, events and causes, and their potential consequences. Resource: Professional Evaluation and Certification Board (PECB) University 3. Risk Assessment 3.1. Risk Identification For example: Introducing an African-Portugeuse themed product in the restaurant menu Low Risks: Loss of possible suppliers for the new product Medium Risks: Poor acceptance from the market; low demands High Risks: Poor food handling and presentation that might lead to food borne illnesses Resource: Professional Evaluation and Certification Board (PECB) University 3. Risk Assessment 3.2. Risk Analysis development of understanding of the risk consideration of the causes and risk sources (their positive and negative consequences) provides an input to risk evaluation and decision (risk treatment strategies) Resource: Professional Evaluation and Certification Board (PECB) University  3. Risk Assessment 3.2. Risk Analysis For example: Introducing an African-Portugeuse themed product in the restaurant menu Low Risks: Loss of possible suppliers for the new product Possible Causes: No outlined research or survey from the external stakeholder (suppliers) Medium Risks: Poor acceptance from the market; low demands Possible Causes: Product is too pricey / poor promotion High Risks: Poor food handling and presentation that might lead to food borne illnesses Possible Causes: Lack of manpower training / poor food safety measures Resource: Professional Evaluation and Certification Board (PECB) University 3. Risk Assessment 3.3. Risk Evaluation The purpose of this step is to assist in decision making about which risks need treatment and priority for treatment implementation. For example: Introducing an African-Portugeuse themed product in the restaurant menu Medium Risks: Poor acceptance from the market; low demands Possible Causes: Product is too pricey / poor promotion Resource: Professional Evaluation and Certification Board (PECB) University  4. Risk Treatment Risk treatment options should be selected based on the outcome of the risk assessment, the expected cost for implementing and benefiting from these options. Medium Risks: Poor acceptance from the market; low demands Possible Causes: Product is too pricey / poor promotion 1. Create appetizing prices for the target market (promos, discounts, freebies) 2. Tap market by intensive visual aids (billboards, vehicle stickers, etc.) or by word of mouth (referrals) Resource: Professional Evaluation and Certification Board (PECB) University  5. Monitoring and Review Monitoring and review can be periodic or ad hoc, and should be a planned part of the risk management process. What to check: Changes to a risk evaluation as a result of improvements in controls A control breach and near miss should be logged at the time of the event A new risk that has been identified. * Partners should review the risk register on a regular basis, such as at a monthly partners’ meeting, to determine if any remedial action needs to be taken immediately. Resource: Chartered Accountants (Australia / New Zealand)  RISK MONITORING AND REVIEW Risk Determined / Evaluated: Poor acceptance from the market; low demands Progress and Compliance Method / Treatment Status Reporting 1. Implemented Promo tie – Increase on transaction counts On going / Promo up with best seller products for the product versus last until end of the month year New Risk: Promo abuse by For Management customers (promo conjunctions) Team discussion 2. Installation of Product Customers are now becoming Banner installation Banners in Mall front aware ; increased number of approved until 2nd areas visits and purchases semester of the year New Risk: Mall admin may For management move banner location into less and mall admin visible position discussion Resource: Chartered Accountants (Australia / New Zealand) HOTEL INSURANCE What is Hotel Insurance? Hotel insurance is a type of insurance that’s specifically designed to meet the needs of hotels. It’s normally written as a package policy, which means one policy contains multiple individual coverage. Liability Coverage Property Coverage Resource: 2021 World Insurance LLC What is Hotel Insurance? 1. Liability Coverage - Generally, protect a business from claims and lawsuits that accuse the business of causing some form of harm. a. General Liability Coverage - which offers protection from many potential incidents. b. Premises Pollution Liability Coverage - which might provide coverage for illnesses guests experience that are caused by mold spores or other airborne contaminants. Resource: 2021 World Insurance LLC c. Cyber Liability Coverage - which may help hotels recover from data breaches that compromise guest information. d. Employment Practices Liability Coverage - which can help protect a hotel from employment-related lawsuits. e. Commercial Auto Liability Coverage - which hotels that have shuttles are typically required by state laws to carry. f. Food-borne Illness Liability Coverage - which hotels that have restaurants or offer morning breakfasts may want. e. Liquor Liability Coverage - which hotels that have bars or offer alcohol might need. Resource: 2021 World Insurance LLC  What is Hotel Insurance? 2. Property Coverage - are used to help protect a business’ property, which may include buildings, other structures, equipment and inventory, from covered perils. a. General Property Coverage - which may provide coverage for a hotel’s building. b. Equipment Breakdown Coverage - which might help pay for repairs that equipment needs if a covered peril causes the equipment to breakdown. Resource: 2021 World Insurance LLC c. Crime Coverage - which may provide coverage for guest and employee theft. d. Food Spoilage Coverage - which might provide compensation for food that spoils during or immediately after a covered incident. e. Utility Interruption Coverage - which may help cover losses sustained during a prolonged utility outage. f. Earthquake, Flood, and Wind Coverage - which is important for hotels situated near oceans. ----- * Hotels may still include other types of insurances based on their appetite (For those who have wedding events may have event cancellation insurance). Resource: 2021 World Insurance LLC HOTEL SECURITY  What is Hotel Security? Security is the degree of resistance to, or protection from, harm. Hotel Security is the having a designed security in a hotel. It is the moral and legal responsibility of a hotel to protect its guests and their property against threats posed by human beings with a conscious intent to harm them. Resource: 2021 World Insurance LLC What are the risks? Examples of Risks Terrorism Kidnapping Robbery by organized crime Opportunist robbery Burglary from rooms Baggage theft Fraud Invasion of guest privacy, by locals, press, interest groups Blackmail of staff Resource: 2021 World Insurance LLC Consequences of Poor Hotel Security Possibility of death Injury Destruction The adverse publicity from an incident Result in ruined reputations Failing business and knock-on Effects to tourism in the country or region. The risk to hotels can also increase because of the identity of an individual guest or his or her family. VIP’s, celebrities or the infamous can present special difficulties. Easy terrorist attacks Resource: 2021 World Insurance LLC What is an Effective Hotel Security? Effective Hotel Security Programs enables the hotel to avoid preventable incidents and react to a quick, appropriate manner. Three basic elements should be included in the program: 1. People 2. Procedure 3. Equipment Resource: 2021 World Insurance LLC Effective Hotel Security Programs People No matter which department or post everyone can contribute to making the hotel a safe place for all. This is not only the concern of the security department. Resource: 2021 World Insurance LLC Effective Hotel Security Programs Procedure Every property needs to have procedures for the staff to follow. The staffs should be well informed about the emergency procedures as well as any unusual events. Resource: 2021 World Insurance LLC  How to do an Effective Hotel Security? The organizational structure of an Effective Hotel Security Programs depends upon the following criteria: 1. Division of work - refers to narrow specialization of tasks within a process so that each employee can become a specialist in doing one thing. 2. Span of Control - is defined as the number of employees reporting directly to one supervisor. Traditionally, the span of control has been defined as four to seven subordinates under one manager. Resource: 2021 World Insurance LLC