Explain the impacts of an effective Risk Management program on an organization (6) - 1. protects
organization's reputation/brand
2. Increases profitability
3. Raises awareness of risk management
4. supports managerial objective
5. Improves morale and productivity
6. Improves quality, process ...
CRM Principles of Risk Management Exam Explain the impacts of an effective Risk Management program on an organization (6) - ✔✔ 1. protects organization's reputation/brand 2. Increases profitability 3. Raises awareness of risk management 4. supports managerial objective 5. Improves morale and pr oductivity 6. Improves quality, process and technology Define Traditional Risk Management (TRM). - ✔✔ a functional, siloed, view of risk affecting one or more areas of the organization (focuses on pure risk) Define Enterprise Risk Management (ERM). - ✔✔ across functional view of risks affecting all areas of the entire organization (embraces speculative risk) Describe characteristics of Traditional Risk Management (TRM) (5) - ✔✔ 1. manages downside risks 2. ori ented to cause -of-loss, tied to minimizing risk impact 3. functional siloed treatement of risk 4. risk ID and ownership with individual employee or department 5. Reactive Describe characteristics of Enterprise Risk Management (ERM) (5) - ✔✔ 1) risk has potential upside and downside 2) tied to strategic objectives 3) cross functional treatment of risk 4) uses subject matter experts and risk committees to identify risk and spreads accountability of risk 5) proactive/opportunistic List the ERM broad cat egories of risk and give examples of each (4). - ✔✔ 1.Operational Risk: related to management activities (speculative) 2) Financial Risk: related to financial activities (speculative) 3) Hazard Risk: covered by insurance (pure) 4) Strategic Risk: rela ted to an organization's strategic plan (speculative) Define Organizational Risk Culture (ORC). - ✔✔ a set of understandings, knowledge, beliefs, values and habits toward risk, that characterize a human group (organization) in search of a common purpose Explain the four characteristics of an effective ORC(4). - ✔✔ 1. Tone at the top - leadership clarity of direction and a positive corporate attitude toward risk 2. Corporate Governance - clear responsibility for risk management; transparency and timeliness of risk information 3. Decision Making - well informed decisions regarding risk; performance evaluations encourage good risk management decisions 4. Authority and Accountability - embedding risk management abilities and responsibilities within the organization. List the benefits of implementing an ERM program(7). - ✔✔ 1. Identifies threats and opportunities related to an organization's strategic plan, objective s and total cost of risk 2. Closely links an organization's business, operational, and strategic objectives to the practice of managing risk 3. Uses performance metrics to drive improvement in decision making 4. Provides a common language for communi cation about risks and opportunities
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