risk in a lay man.docx
TRANSCRIPT
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Risk in a lay mans language means something can go wrong
Generally, It can be defined as a variability from an expected outcome.
All members of sta are responsible for the process of Risk Management, hence
A FINCA faces mainly three types of risk cre!it risk, market risk an! operational
risk"
#perational risk is !e$ne! as the risk of loss resulting from ina!e%uate or faile!
internal processes, people an! systems or from e&ternal e'ents" #perational risk
can be create! by a wi!e range of !ierent e&ternal e'ents ranging from power
failures to (oo!s or earth%uakes to terrorist attacks" )imilarly, operational risk canarise !ue to internal e'ents such as the potential for failures or ina!e%uacies in any
of the FINCAs processes an! systems *e"g" its I+, risk management or human
resources management processes an! systems, or those of its outsource! ser'ice
pro'i!ers" #perational risk arising from human resources management may refer to
a range of issues such as mismanage! or poorly traine! employees- willful
miscon!uct- con(ict of interests- frau!- an! so on" +herefore the emergence of
mistrust, failure to communicate, low morale an! cynicism among sta members,
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as well as increase! turno'er of sta, shoul! be regar!e! as in!icati'e for potential
increase in operational risk"
In conclusion, Internal Controls .epartment will take a lea!ing role in highlighting
critical issues an! sharing notes on #perational risks" +his is inten!e! to support
FINCA business an! other functional units by pro'i!ing risk management awarenessthrough e/mailer up!ates, newsletter an! training sessions"