Risk Mgt. (pg. 5-7) Reviewer (Midterms)

studied byStudied by 0 people
0.0(0)
learn
LearnA personalized and smart learning plan
exam
Practice TestTake a test on your terms and definitions
spaced repetition
Spaced RepetitionScientifically backed study method
heart puzzle
Matching GameHow quick can you match all your cards?
flashcards
FlashcardsStudy terms and definitions

1 / 32

flashcard set

Earn XP

Description and Tags

risky risky

33 Terms

1

enterprise risk management

introduces the importance of integrating strategy setting and performance with risk management

New cards
2

risk identification, risk assessment, risk prioritization, response planning, risk monitoring

The basic steps in risk management are:

New cards
3

risk prioritization

deciding which risks to address and in what order

New cards
4

Risk Identification

Management, with oversight from the board of directors, analyzes the company’s internal business, external environment, business processes, existing controls, and any other areas of potential risk to identify all possible risk events that might adversely impact or otherwise prevent the company from achieving its objectives.

New cards
5

Risk Identification

The _______ process should take place at all levels of the organization. Within each business unit, key employees in areas such as operations, finance and accounting, IT, and unit management should be tapped to take part in the identification of risks in their respective areas. When properly executed, the process of risk identification identifies risks that have a reasonable probability of occurring and impacting operations within a foreseeable period of time.

New cards
6

Internal Events

  • Capital investments made to support strong customer demand, improve customer satisfaction, reduce downtime, and so forth.

  • Technological change creating the need for new processes and changed processes.

  • Personnel events such as work stoppages, employee fraud, or the loss of key employees.

New cards
7

External Events

  • Economic events, both domestic and international, such as a recession or international trade events leading to currency and other price fluctuations.

  • Natural disasters such as fires, floods, hurricanes, earthquakes, or volcanoes.

  • Political events such as new regulations, changes in tax laws, and results of elections.

  • Social factors such as changing demographics.

  • Technological change creating opportunities for new products or services to offer.

New cards
8

Enterprise risk management

emphasizes that risk identification must be considered in light of the overall strategic goals of the business, the threats and opportunities the business faces, and the strengths and weaknesses within the business as a whole, as well .

New cards
9

Brainstorming sessions, Event inventories and loss event data, Interviews and self-assessment, Facilitated workshops, SWOT analysis, Risk questionnaires and risk surveys, Scenario analysis, Technology

The IMA’s Statement on Management Accounting, Enterprise Risk Management: Tools and Techniques for Effective Implementation (SMA:ERMT) lists the following techniques for identifying risks: (8)

New cards
10

Brainstorming sessions

  • are meetings in which employees, management, or staff members are invited to discuss the risks they encounter in their particular fields and to develop solutions through dialogue and idea sharing

  • can be limited to selected organization units

  • however, the results of the brainstorming work can be used by other units to identify their own risks

New cards
11

Event inventories and loss event data

can be used in brainstorming sessions to provide the participants with risks to consider. Event inventories are detailed listings of potential events common to companies within a particular industry or to a particular process or activity common across industries. Loss event data could be a database on actual loss events that have taken place for a specific industry or an archive of actual events experienced by the company that only the longer-tenured management can recall. An archive of actual events that have occurred can serve as a resource of “lessons learned.”

New cards
12

Event inventories

are detailed listings of potential events common to companies within a particular industry or to a particular process or activity common across industries.

New cards
13

Loss event data

could be a database on actual loss events that have taken place for a specific industry or an archive of actual events experienced by the company that only the longer-tenured management can recall

New cards
14

lessons learned

An archive of actual events that have occurred can serve as a resource of “__________.”

New cards
15

Interviews and self-assessment

Each unit assesses its risk management capability and submits its self-assessment to the risk management coordinator, who could be the chief financial officer, the controller, the chief operating officer, or the chief risk officer. The coordinator follows up with inter views to clarify issues. After the information has been completed, a cross-functional team might participate in a facilitated workshop to discuss it.

New cards
16

Facilitated workshops

involve a facilitator leading a discussion about events that may affect the achievement of the entity’s objectives, in order to identify the most critical risks. Alternatively, the workshop might focus on just one unit and on identifying that unit’s most critical risks. Workshops can be limited to management or they can include employees, customers, suppliers, or other stake holders in order to draw on the accumulated knowledge and experience of management, staff, and other stakeholders through structured discussions.

New cards
17

Workshops

can be limited to management or they can include employees, customers, suppliers, or other stakeholders in order to draw on the accumulated knowledge and experience of management, staff, and other stakeholders through structured discussions.

New cards
18

SWOT analysis

is used for formulating strategy

New cards
19

Strengths and weaknesses

are internal and include the company’s culture, structure, financial resources, and human resources.

New cards
20

Opportunities and threats

are external and are usually not under the control of management in the short run. They include political, societal, environmental, and industry risks.

New cards
21

Risk questionnaires and risk surveys

are other sources of information to identify potential risks by providing a list of questions relating to specific risks, both internal and external. Questionnaires can help management think through its risks by providing a list of questions relating to specific risks. Other information might come from customer satisfaction surveys or other customer comments, or from exit interview comments made by departing employees. Information from customer satisfaction surveys and employee exit interviews should be captured and reviewed in order to identify any situations that might represent risks. A risk survey may be used instead of a questionnaire. A risk survey is more open-ended, for instance asking each participant to list the five most important risks to achieving the company’s strategic objectives.

New cards
22

Questionnaires

can help management think through its risks by providing a list of questions relating to specific risks.

New cards
23

risk survey

is more open-ended, for instance asking each participant to list the five most important risks to achieving the company’s strategic objectives

New cards
24

Scenario analysis

involves “what if” questions. Managers consider various scenarios that could occur and how they would impact the business. Potentially, a number of risks can be present within a single event, and the total impact could be substantial.

New cards
25

Technology

  • can be used internally and externally to communicate. Companies with an intranet can encourage managers to post their risk management practices such as checklists on the intranet for use by other units

  • can be used externally to scan the internet for risks related to the company’s products, services, and reputation.

New cards
26

intranet

is a communications network similar to the internet, but access to it is restricted to a limited number of authorized individuals such as employees of the organization.

New cards
27

Risk assessment

is the process of analyzing and quantifying identified risks from three perspectives: the likelihood of the risk’s occurring, the potential impact or the relative significance of the event if it does occur, and the interrelationship of the risks on a unit-by-unit or total organization basis.

New cards
28

Inherent risk, Residual risk

Risk assessment focuses on two kinds of risk:

New cards
29

Inherent risk

  • the level of risk that resides with an event or process prior to management taking a mitigation action (SMA:ERMF)

  • the potential for waste, loss, unauthorized use, or misappropriation due to the nature of the activity itself (U.S. Office of Management and Budget (OMB))

  • is risk related to the very nature of the activities the company undertakes in the normal course of business

  • Management cannot do anything about the existence of _____ risk; however, it can take steps to address and, where appropriate, mitigate the effects of ___ risk.

New cards
30

company’s size

is an essential part of its nature, and yet this inherent quality is the source of all kinds of risks

New cards
31

Residual risk

  • The level of risk that remains after management has taken action to mitigate the risk

  • after all prudent measures have been taken, some risk will always remain

New cards
32

Capital investments, technological change, personnel events

Examples of Internal events (3)

New cards
33

Economic events, natural disasters, political risks, social factors, technological change

Examples of external events (5)

New cards

Explore top notes

note Note
studied byStudied by 64 people
213 days ago
4.7(3)
note Note
studied byStudied by 26 people
891 days ago
5.0(1)
note Note
studied byStudied by 25 people
514 days ago
5.0(1)
note Note
studied byStudied by 4 people
688 days ago
5.0(1)
note Note
studied byStudied by 16 people
903 days ago
5.0(1)
note Note
studied byStudied by 10 people
760 days ago
5.0(1)
note Note
studied byStudied by 67 people
701 days ago
5.0(4)
note Note
studied byStudied by 44 people
758 days ago
5.0(3)

Explore top flashcards

flashcards Flashcard (92)
studied byStudied by 11 people
841 days ago
4.0(1)
flashcards Flashcard (116)
studied byStudied by 10 people
800 days ago
5.0(1)
flashcards Flashcard (43)
studied byStudied by 15 people
3 days ago
5.0(1)
flashcards Flashcard (57)
studied byStudied by 17 people
751 days ago
5.0(2)
flashcards Flashcard (40)
studied byStudied by 2 people
177 days ago
5.0(1)
flashcards Flashcard (71)
studied byStudied by 42 people
385 days ago
5.0(4)
flashcards Flashcard (82)
studied byStudied by 41 people
88 days ago
5.0(1)
flashcards Flashcard (222)
studied byStudied by 29 people
646 days ago
5.0(1)
robot