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Risk Management: Theory and Practice

Risk management theory and practice aims to minimize risk and maximize profits. It involves identifying potential risks, assessing their likelihood and impact, and developing strategies to address them. The goals of risk management are to optimize profits while maintaining an acceptable level of risk for the organization. It is a systematic process that includes continuous risk monitoring, assessment, and evaluating the effectiveness of risk management strategies. Adherence to international risk management standards can help organizations implement risk management practices systematically.

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Viktor Riskov
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203 views

Risk Management: Theory and Practice

Risk management theory and practice aims to minimize risk and maximize profits. It involves identifying potential risks, assessing their likelihood and impact, and developing strategies to address them. The goals of risk management are to optimize profits while maintaining an acceptable level of risk for the organization. It is a systematic process that includes continuous risk monitoring, assessment, and evaluating the effectiveness of risk management strategies. Adherence to international risk management standards can help organizations implement risk management practices systematically.

Uploaded by

Viktor Riskov
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Risk Management

Theory and practice

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Risk

Risk is the risk of adverse outcome of the expected event, i.e.


measurable probability of loss or loss of profits in any sphere
of human activity.
Structural characteristics of risk:
• Event uncertainty (probability)
• variation of outcomes

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Risk management

Risk management - targeted actions to limit or minimize risk in


the system of economic relations.
Benefits of risk management:
• Increases revenue by reducing risk costs and increasing the
efficiency of your organization 's funds
• Can improve an organization 's ability to use speculative risk
profits to recover from adverse net risk realization
• Enables management to plan for the future with greater
confidence and predictability

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Objectives and objectives of risk management

The ultimate goal of management risk is to make the most


profit with an optimal profit-risk ratio acceptable to the
entrepreneur.
Tasks risk of management:
• Continuous monitoring of the external and internal
environment of the enterprise to identify risk factors;
• Establishment and implementation of a risk management
programme (including the use of risk assessment methods, risk
analysis, and measures to reduce and eliminate adverse health
events);
• Assessment of the effectiveness of the risk management
system (acceptability of the use of certain methods,
consideration of new trends dictated by the market)

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Process risk of management

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Standards risk of management
A number of standards have been developed worldwide to help organisations
implement risk management systematically and effectively. These standards
seek to establish a common view on frameworks, processes and practice,
and are generally set by recognised international standards bodies or by
industry groups. Risk management is a fast-moving discipline and
standards are regularly supplemented and updated.
Standards are normally voluntary, although adherence to a standard may be
required by regulators or by contract.
In practice, the following risk management standards are commonly used:
• ISO 31000 2009 - Risk Management Principles and Guidelines
• IRM/Alarm/AIRMIC 2002 - A Risk Management Standard - developed in
2002 by the UK's 3 main risk organisations.
• ISO/IEC 31010:2009 - Risk Management - Risk Assessment Techniques
• COSO 2004 - Enterprise Risk Management - Integrated Framework
• OCEG "Red Book" 2.0: 2009 - a Governance, Risk and Compliance
Capability Model

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Rules risk of management

• You can 't risk more than equity can afford


• You have to think about the consequences of risk
• You can 't risk a lot for a small one
• A positive decision is taken only in the absence of
doubt
• Negative decisions are made in case of doubt
• You can 't think there 's always only one solution.
There may be other solutions

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