1) INTRODUCTION Meaning of the risk is the chance than can bring to loss or unfavourable effect from the action that have be taken. It is because the uncertainty that will arise in future is unknown. More ambiguity about the success of the action, more greater the risk. Such as, for the farm manager, risk management include maximizing the profit and minimizing the risk. Every decisions that be made is usually not known what will happen in future. Hence, the consequences whether better or worse than what is expected. The risk also will be a major to know how great the profit, because without risk there will be know about the profit and the ability to manage it. Each decisions will exist the risk that is a payment to get a return. The consequences that will arise only two, whether possibility to loss or opportunity to get profit. But, as a manger they must know how to choose the alternatives to reduce the risk, to make a better decisions. Although, by the alternatives also will reduce the profit. The greater profit, will generate from high risk alternatives. To manage risk management there have some step that should be followed. First, identify the risk, whether the risk will occur from production , marketing or legal risk. Second, measure the risk, which is the probability of outcome that will occur. Third, assess the risk that be bearing, scan the strategies that will be taken it suitable or not with the person who bear it. Fourth, evaluate the risk by tolerance or preferences, whether to face or avoid the risk based on the revenue in future. Fifth, set the risk management goal, what the outcome that will arise and analysis of objective to be a reality. Sixth, identify the effective tools, difference risk, differ to... ... middle of paper ... ... Based on our research, in 24 April 2013, Maybank was Wins the Operational Risk Infrastructure Project Award for year 2012 awarded by Asian Banker. We can see that the internal control such as operational risk was implemented in a good ways. There are selection process that was led by a panel of global leaders and subject matter experts, selected the Maybank submission based on the following merits which is a successful aggressive implementation plan that covered all regional locations across the Maybank Group network. Besides that, the ability of Maybank Group is to create a paradigm shift in the management of operational risk through a system that provides a 360 degree view of incidents in relation to a particular risk. This group also being m innovative use of technology to broaden the depth and breadth of operational risk management within Maybank Group.
In every industry, there are a lot risks that cause many uncertainties regarding the financial security of different corporations; risks in the short run and in the long run. For that reason, large corporations often allocate a large amount of capital into competent risk managers who are tasked to identify the different risks faced by the company, and to develop efficient risk managing or hedging techniques to handle them.
Risk exposure not only includes legality issues, but also incorporates quality and safety risks, reputation risks, health risks, and mostly importantly, financial risks. The reality is that the above stated risks are interdependent and can have drastic effects on the administration of an organization. The reason risk management is such a daunting task stems from its ambiguous nature (Burke, 2013, p169). Risks are difficult to detect because of the interacting pieces that generate the likelihood of a risky result. Measuring risks also proves to be a seemly convoluted process due to the subjectivity behind the matter. Risks can only be measured as far as the human brain can process the complex parts and contingencies involved. Finally, risk mitigation also poses a problem as finding a solution to an unknown problem is just as difficult as identifying the issue at
The objectives of operation, reporting, and compliance are represented in the column. Components are represented by the rows regarding the ERM. The third dimension is the entity’s organizational structure. It demonstrates clear how and how counteract low risk tolerance and high risk appetite. Risk reduction is obtained by facilitating effective internal control with a broad scope that reflects changes in the framework to risk management with ERM. The framework requires adaptability which enables flexibility due to a overlap of functions of identify, assessing, and responding to risks within operations, reporting, and compliance. Activities, information, communication should be monitored, evaluated, and identified for response are part of the ERM for effective and efficient risk management. The concept of risk appetite and risk tolerance is introduced because the identification of potential events affecting achievement can be managed. Also, the process requires communication, consultation before and monitoring and review after every decision or action (McNally, 2015). The financial principles to risk management are effective risk management creates value, integration, decision making, address uncertainty, systematic structure, and facilitated continuous improvement. The financial principles form effective and efficient management within a firm. Financial principles help ERM with risk
Risk management also applies to operational functions of an organization. Risk management covers all types of listed risks like:
Identify the potential risks which affect the company and manage these risks within its risk appetite;
Because of their close relationship, it is difficult to distinguish the effects of Systematic and Total risk. The inclusion of Unsystematic risk appears to give little explanation to the risk-return relationship. Many investors view Unsystematic risk as irrelevant within the greater context of an investment strategy. The relevancy here is equated with persistent impact of risk, in spite of the best possible risk-minimizing strategies.
Risk is the possibility of losing something valuable which creates uncertainty while making investment decisions. It is going to impact negatively in future. Risk management is that process of developing a system which identifies risks and manage them with different tools. Every risk should have contingency and mitigation plan. Risk management is applied when a company gets an uncertainty difficulty in financial market which threat project failures in design or production phase. The process of making a new product with the help of different raw materials and supplying them to customers is supply chain. Supply chain risk management can be viewed as a strategic management activity in firm. For example: the supply chain of Gap Inc. (Collier.D, & Evans.J, 2012, p.180) begins at the farm where they grow cotton as raw material and then transfer to textile mills where T-shirt and jeans are made. The factories cut and sew the fabric into finished goods, and send them to retail stores for sale.
Here, the risks should be appraised to how and to what level it will impact on the operations of the business in question. The business risk normally considers the standard and the effectiveness of the assets. The performance risk influences the income statement analysis whereby the financial risk influences the liabilities that are capitalize by the assets.
With China planning to open up gradually the banking sector and the constant introduction of new businesses, commercial banks are facing more pressure on the risk management. Operational risk is the inherent risk of commercial banks, and it cannot be avoided completely. However it was investigated that the operational risk was resulting from the credit risk mostly, and it referred to the Ethics in the risk management. There are same like the line graph as following:
Risk is defined as a possibility of an occurrence in a project, which might be a negative or positive impact on a project, even in decisions made by us in our everyday life there is a certain amount of risk involved in it. For instance, walking down the staircase of our homes an unexpected incident can occur like we stumbling on the stairs which wasn’t foreseen and there are some kinds of risk that you actually kno...
Risk management means identifications of risks, accessing their probability and then using measures to cut them down. The objective of IS risk management is to specify the relevant controls. The selection of IS controls for risk management depends upon certain factors like initial implementation and maintenance costs, global acceptance of controls for multinational enterprises, etc. (Peltier, 2013).
Risk management is the term applied to a logical and systematic method of establishing the context, identifying, analyzing, evaluating, treating, monitoring and communicating risks associated with any activity, function or process in a way that will enable organizations to minimize losses and maximize opportunities. (Lecture notes)Risk Management is also described as 'all the things you need to do to make the future sufficiently certain'. (The NZ Society for Risk Management, 2001)
Risk Management allows us to identify the problems which are unknown during the start of the project but may occurs later. Implementing an efficient risk management plan will ensure the better outcome of the project in terms of cost and time.
Risk is an integral part of everyday human life. We both seek, and are unwillingly exposed to varying degrees of risk. Risk can be defined as being a situation with more than one outcome. Risk should be quantifiable, in that, that the risk taker should have an idea of the probabilities of the possible outcomes occurring. For Example, investing in a stock. Investing in a stock can give the investor multiple outcomes, it can give a negative outcome, like when the stock performs badly in the market and the stock decreases in value. Or it can give a positive outcome , like when the stock performs strongly in the market and the stock increases in value. The performance of a stock can be measured through past data gathered from the stock, or from similar stocks.
As the first step, identify potential risks plays a crucial role in the risk management process. The core purpose of identifying risk is to figure out causes of risk and analyze result caused by the risks and its probability . Hence, risk identification can begin with the source of problem, or with the problem itself. The chosen method of identifying risk may depend on culture, industry practice and compliance. The identification