Risk management is the process of making and carrying out decisions that will minimize the adverse effect of accidental losses upon our company. The risk management process is vital to the personal health and safety of employees and the safety of the public. In financial terms, it is vital to our ability to pursue our goals, commence and operate programs, and to perform duties in an efficient and professional manner.The senior management of organization has formed a risk management program to pursue our risk management goals and objectives. These goals and objectives include:
Avoiding exposure to accidental loss by not undertaking functions, contracts, programs or activities where the potential loss is greater than the potential benefit to be derived from these undertakingsPreventing loss by identifying loss exposures and implementing policies and procedures to reduce the risk of these losses occurringControlling losses that do occur by: Assisting and supporting injured parties Developing contingency plans for possible loss scenarios Proper documentation and investigation of lossesDetermining the most cost effective balance of different risk financing tools.Raising the awareness of all board members, senior managers, employees, volunteers and residents concerning risk management within our organization. These goals and objectives will be accomplished by: Establishing a Risk Management Committee with representatives from each department, whose responsibilities will be to implement, monitor, evaluate and revise plans to achieve our goals and objectives Electing a Risk Management Coordinator to serve as the head of the Risk Management Committee and report to the council Including risk management as an item for discussion at every staff meetingCooperation is needed, and expected, from all management and employees. Only by working as a team with common goals and objectives can we ensure the success of this risk management program.
Risk Management: Reputation Risk Management: Reputation risk is the risk of loss resulting from damage to a company’s reputation, in lost revenue or destruction of shareholder value, even if the company is not found guilty of a crime. Reputation risk can be a matter of corporate trust but serves also as a tools in crisis prevention. Usually reputation risk is informational in nature and could be difficult to realize financially. Extreme cases could even lead to bankruptcy. Factors influencing reputation are (i) brand (ii) financial strength (iii) Leadership and management (iv) quality of products and services (v) risk management (vi) work place culture (vii) corporate social responsibility (viii) media coverage (ix) crisis management (x) customer relationship and (xi) mission and values.
Reputation Risk Management is a set of actions and policies taken and established while reputation problems are still latent in order to reduce the probability and/or the expected costs of latent reputation problems materializing. Example of potential internal reputation risks are lack of coherent strategy, corporate responsibility issues, bad quality of service, work stress environment, management related issues, internal fraud, corruption/money laundering, data privacy issues, misspelling practices. The external reputation risks are natural catastrophes, cybercrimes, regulatory and market environment and change in consumer behavior.
Reputation Risk Management like Risk Management framework requires (a) early identification of potential reputation risks and tracking of current risks (b) monitoring of potential and actual reputational risks (c) risk assessment (d) Risk prioritization (e) Actions to mitigate risks.
Risk Management Versus Anti-money laundering related risks : Anti money laundering as a risk category came into focus from 2001 after the vulnerability of financial sector money laundering was considered as a serious issue globally. IRDAI has prescribed the framework for controls from AML Angle. Verification of customer KYC, training of employees and sales force, monitoring of customer transactions, system of generation of alerts for suspicious and cash transactions are some of the key controls prescribed. Whilst internal controls can be managed it is the external controls such as field practices of sales persons are required to be monitored. Risk Management and Rick control units must have strong supervision on the field practices and advice management of the controls to be put in place. AML violations are in high risk category.
Risk Management Versus Business Continuity and Disaster/Emergency/Catastrophe – Recovery Planning: Catastrophe, disaster and emergency, Management – all of these terms are low frequency high severity which may lead to: substantial loss of life, high value property damage, long interruption periods and all other associated effects.
Catastrophe, disaster and emergency – all of these terms are low frequency high severity which may lead to: substantial loss of life, high value property damage, long interruption periods and all other associated effects.