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The World at Risk

Steve FowlerChief Executive OfficerThe Institute of Risk Management

December 2005

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IRM – Who are we ?

Professional education in risk management

Practitioner-led with strong links to leading universities and business schools

2000 members across 50 countries

Sector independent – members from all branches of the risk profession

Not-for-profit organisation

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Areas to cover today

The World at Risk

Evolution of Risk Management

Standards

Skills and Qualifications

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A World at Risk – geological disasters

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A World at Risk – weather

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A World at Risk – fire and explosion

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A World at Risk – environmental contamination

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A World at Risk – human failure

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A World at Risk – terrorism and threat

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A World at Risk – scientific uncertainty

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A World at Risk – emerging new risks

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A World at Risk – governance

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A World at Risk - reputation

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A World at Risk – social responsibility

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A World at Risk – information systems

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A World at Risk – fraud

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A World at Risk – financial systems

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A World at Risk – resilience & recovery

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A World at Risk – supply chains

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A World at Risk – projects and change

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A World at Risk - achievement

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The Risk Management ‘wheel’

Physical Risk

Control

Project Risk

Information Risk

Analysis &

Statistics

Political and Societal Risk

Reward

Personal Effectiveness

Ethics and Responsibility

Reputation

Business Continuity

Risk Financing

Governance

Risk Management

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So what is Risk Management ?

The art and science of managing risk Central to strategic management Management of events & consequences related to

opportunities (upside) and threats to success (downside)

Identification & treatment Continuous and methodical Integrated into the organisation, its objectives,

culture, plans, procedures and accountabilities Led from the top

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A Risk Management Standard

Need for an agreed: terminology - relating to the words used process - for implementing risk management organisation and structure

Earlier standards had not fully addressed risk: as opportunity, had been very specific on process, or had dealt with risk from one ‘angle’ only

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A Risk Management Standard

Launched in September 2002 IRM, AIRMIC and ALARM

partnership Adopted by FERMA Common risk language &

understanding Not ‘box ticking’ approach Pitched at CEO level Translated into 14 languages Over 100,000 copies

downloaded

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FINANCIAL RISKS

INTEREST RATES

FOREIGN EXCHANGE

CREDIT

STRATEGIC RISKS

COMPETITION

CUSTOMER CHANGES

INDUSTRYCHANGES

CUSTOMERDEMAND

HAZARD RISKS

CONTRACTS

NATURALEVENTS

SUPPLIERS

ENVIRONMENT

OPERATIONAL RISKS

REGULATIONS

CULTURE

BOARDCOMPOSITION

LIQUIDITY &CASH FLOW

M & AINTEGRATION

RESEARCH &DEVELOPMENT

INTELLECTUAL CAPITAL

PUBLIC ACCESS

EMPLOYEES

PROPERTIES

PRODUCTS &SERVICES

RECRUITMENT

SUPPLY CHAIN

INFORMATION SYSTEMSACCOUNTING CONTROLS

INTERNALLY DRIVEN

EXTERNALLY DRIVEN

EXTERNALLY DRIVEN

Risk Drivers – an example

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The Risk Management Process – seven key stages

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Next steps with the Standard

Second stage review underway: review against COSO, ANZ 4360, PAS

56, OGC MoR, Basel II etc review against users experiences input into BSi and ISO work

Focus on principles, not ‘how to’

Point to other sources of guidance

More clarity on: Scope of application Benefits and objectives Upside risk People factors

機構的策略目標

風險評價風險分析風險界定風險說明描述

風險估計風險評估

風險報告威脅及機會

決策

風險處置

殘留風險報告

監督

正式稽核

修改

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Expert

Professional

Practitioner

Awareness

The Risk Education Pyramid…….

Formal Qualifications

Training Courses

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Fellowship

Diploma

Certificate

Management of Risk & Uncertainty

IRM programmes

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Higher Degrees, RIMS Fellow, EFARM

First Degree Programmes, ARM, PRM

CRM x 4 (USA, Denmark, Singapore, India), CPRM

Executive Programmes and Short Courses

…….and around the World

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Thank you !