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Risk Manager Responsibilities

Risk managers are responsible for managing the risk to the organisation, its employees, customers, reputation, assets and interests of stakeholders. They may work in a variety of sectors and may specialize in a number of areas including: Enterprise risk; Corporate governance; Regulatory and operational risk; Business continuity; Information and security risk; Technology risk; Market and credit risk. ResponsibilitiesSpecific tasks depend on the industry in which a Risk Manager is working, how specialized his role is and the level at which he is working. However, key activities may include: Planning, designing and implementing an overall risk management process for the organisation;Risk assessment, which involves analyzing risks as well as identifying, describing and estimating the risks affecting the business;Risk evaluation, which involves comparing estimated risks with criteria established by the organisation such as costs, legal requirements and environmental factors, and evaluating the organization’s previous handling of risks;Establishing and quantifying the organization’s ‘risk appetite’, i.e. the level of risk they are prepared to accept;Risk reporting in an appropriate way for different audiences, for example, to the board of directors so they understand the most significant risks, to business heads to ensure they are aware of risks relevant to their parts of the business and to individuals to understand their accountability for individual risks;Corporate governance involving external risk reporting to stakeholders;Carrying out processes such as purchasing insurance, implementing health and safety measures and making business continuity plans to limit risks and prepare for if things go wrong;Conducting audits of policy and compliance to standards, including liaison with internal and external auditors;Providing support, education and training to staff to build risk awareness within the organisation.Risk, Transfer ; Risk transfers could be risk control measures or risk financing measures. Risk control transfers (i) shift the property or activity itself to someone else, (ii) eliminate or reduce the transferor’s responsibility for losses to the transferee, or (iii) cancel obligations that the transferor has assumed for losses to others. Through risk financing transfers, the transferor seeks external funds that will pay for the losses that do occur. Risk financing transfers could be transfer of risk to the Insurers or non-Insurance transfers. Non Insurance transfers differ from Insurance in that the transferees (i) are not legally Insurers, and (ii) usually do not accept enough, exposure units for their losses to be fairly predictable.

Risk Mapping/risk profiling

A graphical depiction of a select number of risks analysing them in terms of probability and severity. The horizontal axis illustrates the probability of loss, high or low, while the vertical axis plots severity, high impact or low impact, two categories in each case (as in the diagram below) to give four categories. Some models use four impact categories and six probability categories. Obviously high probability/high impact losses cannot be tolerated while low probability/low impact losses can be paid out of cashflow. All risks plotted should be reviewed, controlled and financed.

Risk neutralisation

Risk financing method which combines some of the features of risk retention and risk transfer. It involves an arrangement to offset one risk by taking a counterbalancing position on another risk. This happens with futures, weather derivatives and weather swaps, which have elements of risk transfer and risk retention.

Risk of Trade

Loss caused by Fire is an accidental loss. Hence, the same is a risk of trade. Other examples of risks of trade are riot and strike, explosion, flood, burglary, air-crash, machinery breakdown, shipwreck etc. Risk of trade is synonymous to pure risk.

Risk ownership

Part of the risk management process that allocates responsibility at a senior level for managing key risks. The allocation of risk is supported by a mechanism for reporting issues ultimately to the senior person who has overall responsibility for risk management.

Risk pool

MEDICAL, US: 1. Individuals who comprise an insured group based on health status, age, sex, and future health. Also called risk spread . 2. State program that groups those who cannot obtain insurance coverage. Funds for these programs come from either the state or an assessment on insurers. 3. In managed care plans, a collection of funds established by a managed care plan that uses a risk-sharing system (i.e., capitation) with providers of medical services. Funds are taken from withholding a portion of provider fees or capitation payments to make up the reserve to cover unforeseen use of services. Funds that remain at the end of a year are distributed among the providers. Also called pool . 4. Financial account to which a managed care plan’s specific income and expenses are posted.
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Also known as a pool. A group of insurers (or reinsurers) who share the premiums and losses of a risk they have written together, according to an agreement that exists between them. A pool often writes large commercial risks.
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Multiple subjects of insurance insured or reinsured by a single insurer where, to avoid risk concentration and improve risk distribution, different combinations of exposures, perils, and hazards will be underwritten.