Risk Management in Financial Technology - Week 1 Class Lec PPT PDF

FIN8270 Risk Management in Financial Technology Week 1, Class 1  Course Information Review Course Outline Review Instructional Plan Evaluations and Due Dates  Agenda Welcome! Introduction Today’s Content and learning outcomes: - Course Ov...

FIN8270 Risk Management in Financial Technology Week 1, Class 1  Course Information Review Course Outline Review Instructional Plan Evaluations and Due Dates  Agenda Welcome! Introduction Today’s Content and learning outcomes: - Course Overview, Expectations,Course Information - Risk Management in Business - Purpose/General Practice of Risk Management - Risk Management for Financial Technology Businesses  Introduction Professor’s introduction Course structure Students’ introduction: What would be your ideal superpower? What is the worst job you’ve ever had? What was the last thing you’ve learnt that surprised you? What is Risk?  Risk Management …What is it? Why is it important in life? Why is it important in business? Why is it important in technology?  Enterprise Risk Management (ERM) Definition The institute of Risk Managers define enterprise risk management as: “Risk management involves understanding, analyzing and addressing risk to make sure organizations achieve their objectives. It must be proportionate to the complexity and type of organization involved. Enterprise Risk Management (ERM) is an integrated and joined up approach to managing risk across an organization and its extended networks.  Risk Management in Business There are LOTS of different kinds of risk: - Physical Risks - Human Risks - Strategic risk - Location Risks - Technology Risk  Physical Risks - Building risk - Fires risks to buildings - Risks of explosions - Hazardous Material Risk - Acid, Gas, Toxic fumes, Toxic dust or filings - Poisonous liquids or waste  Human Risks - Embezzlement - Theft - Fraud - Illness or injury - Alcohol and drug abuse  Location Risks Location hazards such as: - Wild fires - Storm damage - Floods areas - Hurricanes or tornados - Earthquakes and other natural disasters  Strategic Risks - Not necessarily bad - Financial companies take on risk when lending to consumers - Pharmaceutical companies take on risk through developing unproven new drug. - When structured efficiently some risks can highly profitable operations. Diversification is programs, funding and a process to review/analyze new ventures based on ROI is important  Risk Management in Business - Identifying risks - Risk Prevention - Insuring Against risk  Identifying Risks - Well-prepared businesses can minimize the impact of risks by having a strong risk management strategy in place. - Strategies to identify risks should rely on analyzing a company's specific business activities, processes and past issues to identify problem areas. - Most companies are often presented with risks that can be managed through: - Accepting the risk - Transferring the risk - Reducing the risk - Eliminating the risk  Risk Prevention Preventing risks from occurring in company is best achieved through: - Effective employee training - Process improvements - Remediation action plans - Background checks - Safety checks - Equipment maintenance - Maintenance of sites.  Insuring Against Risk Insurance is important in Risk Management - Professional Liability Insurance - Property Insurance - Workers Compensation Insurance - Product Liability Insurance - Business Interruption Insurance  Group Activity – Risk Management Working in groups of 3, let’s do an experiment. Assign a writer and answer the following questions: What do you think is the greatest risks in business world? When was the last time you read or heard about a companies problem with risk management? Research two companies that were negatively effect by risk management.  Purpose of Risk Management “Risks management is an important process because it empowers a business with the necessary tools so that it can adequately identify and deal with potential risks. Once a risk’s been identified, it is then easy to mitigate it. In addition, risk management provides a business with a basis upon which it can undertake sound decision-making.” (Corporate Finance Institute)  Purpose of Risk Management 1.What are all the risks to our business strategy and operations? 2.How much risk are we willing to take on? 3.How do we ensure we have the right information to manage the risk? 4. How do we determine the size and scope of the risk? 5. How well do we manage risks? 6. What are we doing about the risks? 7. What else can go wrong and how are they interconnected? Practice of Risk Management Identify Measure Assess and and Control Analyze Monitor and Plan Action Implement Risk Management in Financial Tech Businesses - Confidentiality - Integrity - Availability Confidentiality -Protection of information from unauthorized use. Examples: - Personal information - Intellectual property - Security frameworks Integrity - Protection from inappropriate modification - Integrity has failed if unauthorized modifications are made to information or IT systems either intentionally or by accident Availability - If a very important applications is not useable to users, the company's mission and purpose for existence will be affected. - Loss of the ability to use this system or application will affect operations and will result in loss of profits and confidence.  Recap of Today - Course Overview, Expectations,Course Information - Risk Management in Business - Purpose/General Practice of Risk Management - Risk Management for Financial Technology Businesses  Readings for Next Week Sections 1 and 2. https://www.publicsafety.gc.ca/cnt/rsrcs/pblctns/rsk-mngmnt-g d/index-en.aspx?wbdisable=true