Theoretical Framework Of Risk Management

Peggy Zapalac, Director of University Risk Management, Texas A&M University, discuss in his article on risk management why universities implement a wide risk management programs, and highlights the point that The institutions can align their risk appetite with risk management strategies. He said that the internal environment risk Once identified, risks are prioritized or ranked while considering both the impact or consequence of the risk and the likelihood or probability that the risk could occur.

The next step involves identifying strategies for managing risks and assessing those strategies to identify any potential gaps.

And The final step involves developing and implementing a monitoring plan and reporting process for the on-going risk

This movement in fact what is called ERM ( enterprise risk management ), and many companies started to use this approach either because the rating agencies or stock exchanges require it or because it simply makes tremendous sense , however, in some cases because of government regulations.

Nevertheless, says James Lam, who has written several books on the subject and is president of the eponymous ERM consultancy, James Lam & Associates in Wellesley, MA, a solid ERM framework should have four key components: governance structure and policies, risk analytics, risk management strategies, and dashboard reporting and monitoring.

Every organization, no matter its size or industry sector, will need to take these components into account in putting forth their ERM strategy, Lam says. This was just one of the benefits of our ERM journey, says Linda Conrad, director of strategic business risk engineering at global insurer Zurich Financial

Stephen McNally use this phrase in identifying the word “risk” , “ When working toward its objectives, every organization Objectives faces uncertainty which is called “risk”, which can be either positive, representing the opportunities or negative representing the threats.

If we want to establish more effective RM/IC (Risk management & internal controls ) in our organization, we can leverage several new or newly revised standards, guidelines, and resources. Such as:

1. COSO Internal Control—Integrated Framework (2013).

In May 2013, COSO issued a revised version of its Internal Control—Integrated Framework (ICIF). The updated Framework consists of three volumes and a companion document.

2. COSO Enterprise Risk Management—Integrated Framework (2004).

COSO’s Enterprise Risk Management (ERM) Framework was published in 2004 and provides guidance to help businesses and other entities develop and apply their ERM activities. The Framework expands on internal control and provides key principles and concepts on the broader subject of enterprise risk management.

3. ISO Standard 31000:2009—Risk Management (2009).

The ISO’s Standard 31000:2009—Risk Management, published in 2009, sets out principles, a framework, and a process for managing risk that are applicable to any type of organization in the public or private