insurance & risk mgmt final

8/8/2019 Insurance & Risk Mgmt Final

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About About

Risk ManagementRisk Management



Risk Management

³Risk Management is the Identification,

Analysis and Economic Control of those

RISKS which can Threaten the Assets

(Property, Human) or the Earning

Capacity of an Enterprise´



Need for Risk Management

Uncertainty in Enterprise

Growing Complexity in Business Environment

Statutory/ Legal Obligations

Social Obligations



What is Risk Management?What is Risk Management?

Who uses Risk Management?Who uses Risk Management?

How is Risk Management used?How is Risk Management used?



Excellent management practice.

Process steps that enable improvementin decision making.

A logical and systematic approach.

Identifying opportunities. Avoiding or minimising losses.

What is Risk ManagementWhat is Risk Management??



Risk Management is the name givento a logical and systematic methodof identifying, analysing, treatingand monitoring the risks involved in

any activity or process.




Risk Management is amethodology that helps managersmake best use of their available

resources




Risk Managementpractices are widely used

in public and the privatesectors, covering a widerange of activities oroperations.

These include:


Finance andInvestment

Insurance

Health Care

Public

Institutions

Governments

Finance andInvestment

Insurance

Health Care

Public

Institutions

Governments



Effective Risk ManagementEffective Risk Managementis a recognised and skilled system.

Educational institutions have formalstudy courses and award degrees in RiskManagement.

TheRisk Management process is wellestablished. (International RM process

standards.)




Risk Management isnow an integral part of business

planning.




The Risk Management process

steps is a guide for anyorganisation, regardless ofthe type of business, activityor function.

How is Risk Management used?How is Risk Management used?

There are

77 stepsin the RMprocess



The basic process steps are:

Establish the context

Identify the risks

Analyse the risks

Evaluate the risks

Treat the risks



¶Risk· is dynamic and subject to constantchange, so the process includes:

Communication & consultation

Monitoring and review

and



The Risk Management process:

The strategic and organisational contextin which risk management will takeplace.

For example, the nature of yourbusiness, the risks inherent in yourbusiness and your priorities.





Defining types of risk, for instance,¶Strategic· risks to the goals andobjectives of the organisation.

Identifying the stakeholders, (i.e.,whois involved or affected).

Past events, future developments.

Identify the risks




Analyse the risks

How likely is the risk event to happen?(Probability and frequency?)

What would be the impact, cost orconsequences of that event occurring?(Economic, political, social?)




Evaluate the risks

Rank the risks according tomanagement priorities, by riskcategory and rated by likelihood and

possible cost or consequence.

Determine inherent levels of risk.




Treat the risks

Develop and implement a plan with specificcounter-measures to address theidentified risks.

Consider:

Priorities (Strategic and operational)

Resources (human, financial and technical)

Risk acceptance, (i.e. low risks)



TheRisk Management process:

Document your risk management plan anddescribe the reasons behind selecting therisk and for the treatment chosen.

Record allocated responsibilities, monitoringor evaluation processes, and assumptions onresidual risk.

Treat the risks




Risk Management policies and decisionsmust be regularly reviewed.

Monitor and review

In identifying, prioritising and treating risks,organisations make assumptions and decisionsbased on situations that are subject tochange, (e.g., the business environment,trading patterns, or government policies).




Risk Managers must monitor activities andprocesses to determine the accuracy ofplanning assumptions and the effectiveness

of the measures taken to treat the risk.Methods can include data evaluation,audit, compliance measurement.

Monitor and review





Identify the risks

Analyse the risks

Evaluate the risks

Treat the risks



Responsibilities must be allocated:Responsibilities must be allocated:

Appoint a Risk Management champion withAppoint a Risk Management champion with

appropriate qualifications, includingappropriate qualifications, includingexperience and analytical skills.experience and analytical skills.

Form a Risk Management Committee,Form a Risk Management Committee,representative of operational areas.representative of operational areas.

Conduct Risk Management Workshops.Conduct Risk Management Workshops.

Determine operating procedures.Determine operating procedures.

Who does the Risk Assessment?Who does the Risk Assessment?Who does the Risk Assessment?Who does the Risk Assessment?



1.1. Identify commodity or control risks;Identify commodity or control risks;e.g., high duty rates or quantitye.g., high duty rates or quantitycontrols, the demand for prohibitedcontrols, the demand for prohibited

goods, such as drugs, traffic in CITIES,goods, such as drugs, traffic in CITIE

S,wildlife.wildlife.

2.2. Research existing databases andResearch existing databases andrecords on commodity and traderrecords on commodity and trader

histories.histories.3.3. Evaluate current procedures to identifyEvaluate current procedures to identifypotential control weaknesses.potential control weaknesses.

Sources of information for Risk AssessmentsSources of information for Risk AssessmentsSources of information for Risk AssessmentsSources of information for Risk Assessments



After identifying and analyzing the risks,After identifying and analyzing the risks,you can evaluate.you can evaluate.

What is the likelihood of the risk eventWhat is the likelihood of the risk eventoccurring?occurring?

Evaluate the risksEvaluate the risksEvaluate the risksEvaluate the risks

Almost certainAlmost certainLikelyLikelyModerateModerate

UnlikelyUnlikelyRare?Rare?

Almost certainAlmost certainLikelyLikelyModerateModerate

UnlikelyUnlikelyRare?Rare?

What is theWhat is theconsequenceconsequenceif the riskif the risk

eventeventoccurs?occurs?

What is theWhat is theconsequenceconsequenceif the riskif the risk

eventeventoccurs?occurs?

ExtremeExtremeVery highVery highModerateModerateLowLow

Negligible?Negligible?

ExtremeExtremeVery highVery highModerateModerateLowLow

Negligible?Negligible?



This helps in ensuring a consistent approachThis helps in ensuring a consistent approach

in future risk assessment and review andin future risk assessment and review andmonitoring.monitoring.

It promotes a common understanding withinIt promotes a common understanding withinthe Administration.the Administration.




After establishing ¶After establishing ¶LikelihoodLikelihood· and· and¶¶ConsequenceConsequence· you can use a table like this to· you can use a table like this toset a level of risk.set a level of risk.


Extreme Very high Moderate Low Negligible

Almostcertain

Severe Severe High Major Moderate

Likely Severe High Major Significant Moderate

Moderate High Major Significant Moderate Low

Unlikely Major Significant Moderate Low Very low

Rare Significant Moderate Low Very low Very Low

You must define what these risk levels mean to you. You must define what these risk levels mean to you. You must define what these risk levels mean to you. You must define what these risk levels mean to you.



Low and very low level risks can normallyLow and very low level risks can normallybe accepted, subject to onbe accepted, subject to on--goinggoingmonitoring.monitoring.

All other risks are included in theAll other risks are included in themanagement plan.management plan.

The plan catalogues the risks, the level ofThe plan catalogues the risks, the level of

risk, and describes a treatment.risk, and describes a treatment.The treatment is the action proposed,The treatment is the action proposed,(and perhaps the resources allocated).(and perhaps the resources allocated).

Treating the risksTreating the risksTreating the risksTreating the risks



Monitor & ReviewMonitor & ReviewMonitor & ReviewMonitor & Review

The initial assessment made of theexistence and level of risks must beevaluated on a regular basis.

You need to measure the effectiveness ofrisk profiles and update as necessary.

Reliable reporting of examination resultsReliable reporting of examination results Reliable reporting of examination resultsReliable reporting of examination results

Compliance measurement activitiesCompliance measurement activities Compliance measurement activitiesCompliance measurement activities Feedback from the business communityFeedback from the business community Feedback from the business communityFeedback from the business community

Results analysis and data comparisonsResults analysis and data comparisons Results analysis and data comparisonsResults analysis and data comparisons



The starting point is theThe starting point is the Action PlanAction Plan::

1.1. Allocate responsibilities, e.g., a RiskAllocate responsibilities, e.g., a RiskManagement Champion and a working party.Management Champion and a working party.

2.2. Evaluate how Risk Management processesEvaluate how Risk Management processescan be best applied incan be best applied in youryour nationalnationalenvironment.environment.

3.3. Survey existing skills and do a trainingSurvey existing skills and do a training

needs assessment.needs assessment.4.4. Catalogue existing sources of data orCatalogue existing sources of data or

information that can help in identifyinginformation that can help in identifyingrisks.risks.

Using Risk ManagementUsing Risk Management



5.5. Flow chart existing processes.Flow chart existing processes.

6.6. Communicate and consultCommunicate and consult ²² within Customs,within Customs,with other Agencies, the trading communitywith other Agencies, the trading communityand transport industry.and transport industry.

7.7. Obtain IT tools or set up processes forObtain IT tools or set up processes foreffectively operating a selectivity system.effectively operating a selectivity system.

8.8. Provide training in profiling/selectivity skills.Provide training in profiling/selectivity skills.

9.9. Test and gain confidence in the RiskTest and gain confidence in the RiskManagement process.Management process.

Using Risk ManagementUsing Risk Management

insurance & risk mgmt final

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