framework for enterprise risk management (erm) - risk matrix
DESCRIPTION
Enterprise risk management (ERM) in business includes the methods and processes used by organizations to manage risks and seize opportunities related to the achievement of their objectives. ERM provides a framework for risk management, which typically involves identifying particular events or circumstances relevant to the organization's objectives (risks and opportunities), assessing them in terms of likelihood and magnitude of impact, determining a response strategy, and monitoring progress. By identifying and proactively addressing risks and opportunities, business enterprises protect and create value for their stakeholders, including owners, employees, customers, regulators, and society overall. (ERM)... ERM can also be described as a risk-based approach to managing an enterprise, integrating concepts of internal control, the Sarbanes–Oxley Act, and strategic planning. ERM is evolving to address the needs of various stakeholders, who want to understand the broad spectrum of risks facing complex organizations to ensure they are appropriately managed. Regulators and debt rating agencies have increased their scrutiny on the risk management processes of companies. For more information: http://en.wikipedia.org/wiki/Enterprise_risk_managementTRANSCRIPT
Framework for Enterprise
Risk Management (ERM)
“Risk Matrix” RISK
Abdelrahman Adel Ibrahim Introduction to General Management Magellan MBA 2014/2015
ERM
Process
3 Definitions
2
AGENDA
Mo’men EGYPT
1
1 Risk Matrix Framework
Framework for Enterprise Risk Management (ERM)
“Risk Matrix”
1 Mo’men
EGYPT
2 Risk Matrix Framework
Mo’men Worldwide
Libya
Egypt UAE
Bahrain
Malaysia Sudan
3 Risk Matrix Framework
2 Definitions
4 Risk Matrix Framework
Important Definitions
Risk
• A risk is defined as the effect of uncertainty
(either positive or negative) on business
objectives.
• Refers to the coordinated activities to direct and
control an organization with regard to risk.
• Is about managing threats and realizing and/or
maximizing opportunities.
5 Risk Matrix Framework
Risk
Management
3 ERM
Process
6 Risk Matrix Framework
Risk Identification
Risk assessment & measurement
Risk response & Action
Monitoring
Reporting
7 Risk Matrix Framework
i. Risk Identification
8 Risk Matrix Framework
Strategic
Financial
Compliance
Operational
ii. Risk Assessment “RISK MATRIX”
9 Risk Matrix Framework
level of risk Combination of likelihood
and consequence / impact
iii. Risk Response and Action
Accept
Mitigate
Transfer
Avoid
Definition Response
ERMC decides to accept, manage and monitor the level of
risk and take no action to reduce the risk.
ERMC is willing to accept some risk by implementing control
processes to manage the risk within established tolerances.
ERMC chooses to transfer the risk to a third party (e.g.
obtaining insurance).
ERMC feels the risk is unacceptable and will specifically
avoid the risk (e.g. cease selling a product or lending in a
specific market)
Risk Matrix Framework
*ERMC: Enterprise Risk Management Committee
10
iv. Monitoring
Risk Matrix Framework 11
v. Reporting
Risk Matrix Framework 12
Framework for Enterprise
Risk Management (ERM)
“Risk Matrix” RISK THANK YOU
By: Abdelrahman Ibrahim E-mail: [email protected] Subject: IGM – Magellan MBA 2014/2015
9/15/2014