OCT 2016 RISK Tips Risk

Helping You Understand Risk Management

Weekly Digest of Fundamentals of Risk Management

Operational Risk Management Operational risk can be summarized as human risk; it is the risk of business operations failing due to human error. It changes from industry to industry, and is an important consideration to make when looking at potential investment decisions. Industries with lower human interaction are likely to have lower operational risk.

Does This Imply That Most Risks Are Or Start as Operational Risk When you think about it, most business failures are created by adverse or humane activity gone wrong. Fraud, theft, cyber crime or mistakes and erroneous judgment/decisions, these have a higher likely-hood of occurrence than natural disasters or market failures which arguable my be connected to human activity. For Instance global recessions and systemic risks have more to do with poor judgement than they are naturally occurring events and to a large extent they can be prevented using effective risk management processes.

Operational Risk Management The term Operational Risk Management (ORM) is defined as a continual cyclic process which includes risk assessment, risk decision making, and implementation of risk controls, which results in acceptance, mitigation, or avoidance of risk. ORM is the oversight of operational risk, including the risk of loss resulting from inadequate or failed internal processes and systems; human factors; or external events.

Four Principles Of Operational Risk Management (US Department of Defence) Accept risk when benefits outweigh the cost. Accept no unnecessary risk. Anticipate and manage risk by planning. Make risk decisions at the right level.

Levels of Operational Risk Management • In-depth In depth risk management is used before a project is implemented, when there is plenty of time to plan and prepare. Examples of in-depth methods include training, drafting instructions and requirements, and acquiring personal protective equipment.

• Deliberate Deliberate risk management is used at routine periods through the implementation of a project or process. Examples include quality assurance, on-the-job training, safety briefs, performance reviews, and safety checks. • Time Critical Time critical risk management is used during operational exercises or execution of tasks. It is defined as the effective use of all available resources by individuals, crews, and teams to safely and effectively accomplish the mission or task using risk management concepts when time and resources are limited. Examples of tools used includes execution check-lists and change management. This requires a high degree of situational awareness.

“The art of war teaches us to rely not on the likelihood of the enemy's not coming, but

on our own readiness to receive him; not on the chance of his not attacking, but

rather on the fact that we have made our position unassailable”

Sun Tzu The Art of War

C R M Certified Risk Manager

Professional Certification for Risk Managers

in Nigeria, and the second of its kind in Sub-Saharan Africa. This certification is for those working in risk management and related fields; such as Finance, Insurance, Financial Control, Legal, Accounting, and Compliance Specialists. In addition, Consultants, and business line staff can also undergo the programme. The examination comes in three stages, which can be attempted over a period of 2 years and above. While the examination is open to graduates and professionals, the title of CRM can only be attained by first passing the exam and demonstrating minimum of 2 years professional experience in risk management or related fields. NEXT DIET WEDNESDAY 12th OCTOBER 2016 STAGE I THURSDAY 13th OCTOBER 2016 STAGE II

CRM is the first professional certification exam in risk management