Risk Management

Risk Management

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Risk Management has assumed a key role internationally. It is used primarily to identify and mitigate any impact on objectives.

Applying an integrated risk management framework enables an organisation to be proactive in identifying these risks and then realise potential opportunities in managing or mitigating its impact.

Risk Management has assumed a key role internationally. It is used primarily to identify any impact on objectives (which can be short-term, medium-term or long-term). Applying an integrated risk management framework enables an organisation to be proactive in identifying these risks and then realise potential opportunities in managing or mitigating its impact.

The United Nations Country Team for Afghanistan has implemented an Enterprise Risk Management (ERM) framework based upon the international standards – ISO 31000. This international standard has been extensively adopted by public and private sectors globally. It provides a very practical and logical approach to the management of risks, which can be easily and universally applied.

In the United Nations System ERM is of increasing importance and has been implemented throughout numerous Agencies, Funds and Programmes as well as the United Nations Secretariat. At the 64th session of the General Assembly (2010) the report from the Secretary General included a recommendation for a UN Secretariat Wide ERM.

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What is Risk?

[Risk] is the chance of something happening that will have an impact on objectives.

It is measured in terms of Consequences and Likelihood

 

Risk arises out of uncertainty about an event or circumstance, or even a process. It is the exposure to such things that can have an impact on what you want to achieve and includes economic/financial or resource loss (fraud, diversion, misappropriation, theft etc); physical damage; injury; and adverse programme intervention or delay.

 

The concept of risk has two elements:

• The likelihood of something happening, and

• The consequence(s) or impact if it happens.

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The level of risk is the product of the likelihood of a risk occurring, and the consequences if it does occur. Action taken to manage risk will need to address the likelihood of any event occurring, or the consequences if it does occur, or both, to change the level of risk.

What is Risk Management?

[Risk Management] is the culture, processes and structures that are directed
towards the effective management of
Potential Opportunities and Adverse Effects

 

Risk management is a central part of any organisation’s strategic management processes. It is the process whereby organisations methodically assess the risks attached to their activities, with the objective of understanding the potential opportunities as well as the effects of these. It is also recognizing that risk is inherent in everything we do – from managing a project, dealing with clients, deciding work priorities, and even travelling to work in the morning.

We manage risks all the time, sometimes knowingly; sometimes without realising it, but rarely with a logical framework to assist us. Risk management should be a continuous and developing process that is methodical and easily applied. Importantly, risk management should assist and improve decision making as we should be better informed about how risks will impact on our objectives.

Without risk management we will make decisions that are not based on a careful consideration of the facts, and the risks involved.

  This means we lose opportunities to improve the way we manage our business, and also are unnecessarily exposed to things that can cause harm; and

  We may continue to make the same mistakes over and over again, and may lose the support of our clients, donors and even colleagues.

What is the Risk Management Process?

[The Risk Management Process ] entails the systematic application of
management policies, procedures and practices to the tasks of –
establishing the context, identifying, analysing, assessing, treating,
monitoring, and communicating risk

 

Risk management is the term applied to a logical and systematic method of establishing the context and the identification, analysis, evaluation, treatment, ongoing monitoring and communication of risks associated with any activity, function or process in a way that will enable organisations to minimise losses and maximise opportunities. It is however important for risk management to be a proactive exercise, to help inform decision making, prior to risk having an impact on what you are trying to achieve.

The below diagram provides an overview of how it all fits together: