ERM QUIZ

• Risk Management


  A structured approach to identifying, evaluating, and addressing risks to reduce their potential adverse effects and enhance opportunities for achieving organizational goals
• Risk Identification


  Pinpointing and recording possible risks that could impact the organization's goals
• Risk Assessment


  Evaluating risks based on their probability of occurring and the potential impact on the organization
• Risk Mitigations


  Formulating and executing strategies to address risks
• Risk Avoidance


  • Totally eliminating the risk by dodging the activity that generates it
• Risk Reduction


  • Decreasing the probability or severity of a risk
• Risk Transfer


  • Redirecting the financial responsibility or repercussions of a risk to another party
• Risk Acceptance


  • Recognizing the risk and opting to embrace the potential outcomes
• Asset Protection


  • Protecting organizational assets, encompassing physical, financial, and intangible assets, from potential threats or vulnerabilities that could lead to loss or harm
• Decision Enhancement


  • Equipping decision-makers with trustworthy and timely information about risks, opportunities, and potential outcomes, enabling informed and efficient decision-making processes
• Stakeholder Safeguarding


  • Protecting the interests, rights, and welfare of stakeholders, such as employees, customers, investors, partners, and the community, from potential risks originating from organizational activities or decisions
• Resilience Promotion


  • Strengthening the organization's capacity to endure and adjust to adverse events, disruptions, or uncertainties, thereby guaranteeing operational continuity and mitigating the impact of disruptions on organizational performance
• Risk Management Nature


  • Ongoing process
  • Dynamic and needs to be adapted to changing circumstances
  • Cost-effective approach to managing uncertainty
  • Collaborative effort that requires input from all stakeholders
• Classification of Risks


  • Internal Risks (controlled)
  • External Risks (uncontrolled)
  • Known Risks (identified/existing)
  • Unknown Risks (unexpected)
• Scopes of Risk Management

  • Enterprise wide risk management
  • Project specific risk management
  • Operational risk management
  • Financial risk management
  • Strategic risk management
• Importance of Risk Management in Human Resource Management

  • Ensure compliance with labor laws and regulations
  • Mitigate risks associated with recruitment and selection
  • Manage employee performance and conduct
  • Maintain a positive and productive work environment
• HR Risks


  • Discrimination and harassment lawsuits
  • Wrongful termination claims
  • Workplace safety hazards
  • Data security breaches involving employee information
  • Employee theft or Fraud
• Mesopotamia devised irrigation systems and constructed granaries to store excess crops for periods of scarcity
• Ancient Egypt practiced crop diversification and constructing levees to safeguard against Nile floods
• Feudal system - Lords offered protection in exchange for loyalty and labor from peasants
• Guilds formed as organizations of craftsmen and merchants, offering mutual assistance, apprenticeship programs, and enforcing quality standards
• Insurance companies began offering policies to protect against risks such as fire, marine accidents, and premature death during the Industrial Revolution
• Formal workplace safety standards began to take shape during the Industrial Revolution
• Advancement of risk assessment approaches, such as Value at Risk (VaR) models, to gauge and manage financial risks within investment portfolios and banking activities in the 20th century
• Value at Risk (VaR)


  A statistical measure that quantifies the potential financial losses within a firm, portfolio, or position over a defined time period
• Agencies like the Securities and Exchange Commission (SEC) in the United States were established to oversee financial markets and enforce regulations in the 20th century
• Increased globalization and technological advancements in the late 20th and early 21st centuries led to new risks such as cyber threats, environmental degradation, and systemic financial risks
• Organizations embraced integrated approaches to risk management, concentrating on identifying and mitigating risks across all angles of their operations (Enterprise Risk Management)
• Chance of Loss


  The chance or probability of something negative happening, which could lead to detriment, harm, or financial setback
• Hazard


  Conditions or circumstances with the potential to inflict harm, damage, or loss
• Pure Risks


  • Situations where there's only a possibility of loss or no loss at all, with no chance of gain
• Types of Pure Risks

  • Personal Risks
  • Property Risks
  • Liability Risks
• Speculative Risks


  • Involve scenarios where there's potential for both gain and loss
• Types of Speculative Risks

  • Financial Risks
  • Business Risks
  • Market Risks
  • Credit Risks
• Strategic Risks


  • Arise from the strategic decisions or actions undertaken by an organization in the pursuit of its goals
• Types of Strategic Risks

  • Reputational Risks
  • Operational Risks
  • Regulatory and Compliance Risks
• Operational Risk


  The risk of loss due to inadequate or failed internal processes, people, systems, or external events, encompassing legal risk but excluding strategic and reputational risk
• Risk Control & Self Assessment (RCSA)


  The process of identifying and documenting potential significant risks and their associated controls, concentrating on identifying and assessing potential future risks
• Key Risk Indicators (KRIs)


  Measurable indicators that serve as early warning signals, offering information about heightened current or potential levels of operational risk
• Investment


  Involves allocating money, time, or resources with the expectation of future benefits, usually in the form of profit or income