|
Operational Risk Management
Operational risk management (ORM) is defined as a continual recurring process that includes risk assessment, risk decision making, and the implementation of risk controls, resulting in the acceptance, mitigation, or avoidance of risk. ORM is the oversight of operational risk, including the risk of loss resulting from inadequate or failed internal processes and systems; human factors; or external events. Unlike other type of risks (market risk, credit risk, etc.) operational risk had rarely been considered strategically significant by senior management. Four principles The U.S. Department of Defense summarizes the principles of ORM as follows: * Accept risk when benefits outweigh the cost. * Accept no unnecessary risk. * Anticipate and manage risk by planning. * Make risk decisions in the right time at the right level. Three levels ; In Depth: In depth risk management is used before a project is implemented, when there is plenty of time to plan and prepare. Examples of in de ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Operational Risk
Operational risk is the risk of losses caused by flawed or failed processes, policies, systems or events that disrupt business operations. Employee errors, criminal activity such as fraud, and physical events are among the factors that can trigger operational risk. The process to manage operational risk is known as operational risk management. The definition of operational risk, adopted by the European Solvency II Directive for insurers, is a variation adopted from the Basel II regulations for banks: "The risk of a change in value caused by the fact that actual losses, incurred for inadequate or failed internal processes, people and systems, or from external events (including legal risk), differ from the expected losses". The scope of operational risk is then broad, and can also include other classes of risks, such as fraud, security, privacy protection, legal risks, physical (e.g. infrastructure shutdown) or environmental risks. Operational risks similarly may impact br ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Benefit Risk
When the actual benefits of a venture are less than the projected or estimated benefits, the result is known as a benefit shortfall. If, for instance, a company is launching a new product or service and projected sales are 40 million dollars per year, whereas actual annual sales turn out to be only 30 million dollars, then the benefit shortfall is said to be 25 percent. Sometimes the terms "demand shortfall" or "revenue shortfall" are used instead of benefit shortfall; see volume risk. Public and private enterprises alike fall victim to benefit shortfalls. Prudent planning of new ventures will include the risk of benefit shortfalls in risk assessment and risk management. The discipline of benefits realisation management Benefits realization management (BRM), also benefits management, benefits realisation or project benefits management, is a project management methodology, often visual, addressing how time and resources are invested into change management, making d ... seeks t ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Tactical Risk Management
Risk management is the identification, evaluation, and prioritization of risks, followed by the minimization, monitoring, and control of the impact or probability of those risks occurring. Risks can come from various sources (i.e, threats) including uncertainty in international markets, political instability, dangers of project failures (at any phase in design, development, production, or sustaining of life-cycles), legal liabilities, credit risk, accidents, natural causes and disasters, deliberate attack from an adversary, or events of uncertain or unpredictable root-cause. Retail traders also apply risk management by using fixed percentage position sizing and risk-to-reward frameworks to avoid large drawdowns and support consistent decision-making under pressure. There are two types of events viz. Risks and Opportunities. Negative events can be classified as risks while positive events are classified as opportunities. Risk management standards have been developed by vario ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Solvency II
Solvency II Directive 20092009/138/EC is a Directive (European Union), Directive in European Union law that codifies and harmonises the EU insurance regulation. Primarily this concerns the amount of capital that European Union, EU insurance companies must hold to reduce the risk of insolvency. Following an EU Parliament vote on the Omnibus II Directive on 11 March 2014, Solvency II came into effect on 1 January 2016. This date had been previously pushed back many times. Aims EU insurance legislation aims to unify a single EU insurance market and enhance consumer protection. The third-generation Insurance Directives established an "EU passport" (single licence) for insurers to operate in all member states if they fulfilled EU conditions. Many member states concluded the EU minima were not enough, and took up their own reforms, which still led to differing regulations, hampering the goal of a single market. Political implications of Solvency II A number of the large Life Insurers ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Risk Management Tools
In simple terms, risk is the possibility of something bad happening. Risk involves uncertainty about the effects/implications of an activity with respect to something that humans value (such as health, well-being, wealth, property or the environment), often focusing on negative, undesirable consequences. Many different definitions have been proposed. One international standard definition of risk is the "effect of uncertainty on objectives". The understanding of risk, the methods of assessment and management, the descriptions of risk and even the definitions of risk differ in different practice areas (business, economics, environment, finance, information technology, health, insurance, safety, security, privacy, etc). This article provides links to more detailed articles on these areas. The international standard for risk management, ISO 31000, provides principles and general guidelines on managing risks faced by organizations. Definitions of risk Oxford English Dictionary ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Risk Management
Risk management is the identification, evaluation, and prioritization of risks, followed by the minimization, monitoring, and control of the impact or probability of those risks occurring. Risks can come from various sources (i.e, Threat (security), threats) including uncertainty in Market environment, international markets, political instability, dangers of project failures (at any phase in design, development, production, or sustaining of life-cycles), legal liabilities, credit risk, accidents, Natural disaster, natural causes and disasters, deliberate attack from an adversary, or events of uncertain or unpredictable root cause analysis, root-cause. Retail traders also apply risk management by using fixed percentage position sizing and risk-to-reward frameworks to avoid large drawdowns and support consistent decision-making under pressure. There are two types of events viz. Risks and Opportunities. Negative events can be classified as risks while positive events are classifi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Risk
In simple terms, risk is the possibility of something bad happening. Risk involves uncertainty about the effects/implications of an activity with respect to something that humans value (such as health, well-being, wealth, property or the environment), often focusing on negative, undesirable consequences. Many different definitions have been proposed. One ISO standard, international standard definition of risk is the "effect of uncertainty on objectives". The understanding of risk, the methods of assessment and management, the descriptions of risk and even the definitions of risk differ in different practice areas (business, economics, Environmental science, environment, finance, information technology, health, insurance, safety, security, security, privacy, etc). This article provides links to more detailed articles on these areas. The international standard for risk management, ISO 31000, provides principles and general guidelines on managing risks faced by organizations. Defi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Optimism Bias
Optimism bias or optimistic bias is a cognitive bias that causes someone to believe that they themselves are less likely to experience a negative event. It is also known as unrealistic optimism or comparative optimism. It is common and transcends gender, ethnicity, nationality, and age. Autistic people are less susceptible to this kind of bias. It has also been reported in other animals, such as rats and birds. Four factors can cause a person to be optimistically biased: their desired end state, their cognitive mechanisms, the information they have about themselves versus others, and overall mood. The optimistic bias is seen in a number of situations. For example: people believing that they are less at risk of being a crime victim, smokers believing that they are less likely to contract lung cancer or disease than other smokers, first-time bungee jumpers believing that they are less at risk of an injury than other jumpers, or traders who think they are less exposed to potential l ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Operational Risk
Operational risk is the risk of losses caused by flawed or failed processes, policies, systems or events that disrupt business operations. Employee errors, criminal activity such as fraud, and physical events are among the factors that can trigger operational risk. The process to manage operational risk is known as operational risk management. The definition of operational risk, adopted by the European Solvency II Directive for insurers, is a variation adopted from the Basel II regulations for banks: "The risk of a change in value caused by the fact that actual losses, incurred for inadequate or failed internal processes, people and systems, or from external events (including legal risk), differ from the expected losses". The scope of operational risk is then broad, and can also include other classes of risks, such as fraud, security, privacy protection, legal risks, physical (e.g. infrastructure shutdown) or environmental risks. Operational risks similarly may impact br ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Key Risk Indicator
A key risk indicator (KRI) is a measure used in management to indicate how risky an activity is. Key risk indicators are metrics used by organizations to provide an early signal of increasing risk exposures in various areas of the enterprise. It differs from a key performance indicator (KPI) in that the latter is meant as a measure of how well something is being done while the former is an indicator of the possibility of future adverse impact. KRI give an early warning to identify potential events that may harm continuity of the activity/project. KRIs are a mainstay of operational risk analysis. Definitions According to OECD :''A risk indicator is an indicator that estimates the potential for some form of resource degradation using mathematical formulas or models.'' Risk management Security risk management According to Risk IT framework by ISACA, key risk indicators are metrics capable of showing that the organization is subject or has a high probability of being subject ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Futures Techniques
Futures techniques used in the multi-disciplinary field of futurology by futurists in Americas and Australasia, and futurology by futurologists in EU, include a diverse range of forecasting methods, including anticipatory thinking, backcasting, simulation, and visioning. Some of the anticipatory methods include, the delphi method, causal layered analysis, environmental scanning, morphological analysis, and scenario planning. Anticipatory thinking protocols Delphi method The Delphi method is a popular technique used in futurology. It was developed by Gordon and Helmer in 1953 at RAND. It can be defined as a method for structuring a group communication process, so that the process is effective in allowing a group of individuals, as a whole, to deal with a complex problem. It uses the iterative, independent questioning of a panel of experts to assess the timing, probability, significance and implications of factors, trends and events in the relation to the problem bein ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Fuel Price Risk Management
Fuel price risk management, a specialization of both financial risk management and oil price analysis and similar to conventional risk management practice, is a continual cyclic process that includes risk assessment, risk decision making and the implementation of risk controls. It focuses primarily on when and how an organization can best Hedge (finance), hedge against exposure to fuel price volatility (finance), volatility. It is generally referred to as "bunker hedging" in marine and shipping contexts and "fuel hedging" in aviation and trucking contexts. Providers of fuel price risk management services Fuel price risk management services are predominantly provided by specialist teams within fuel management companies, oil companies, financial institutions, utilities and trading companies. Examples include: :Fuel management companies – Mercatus Energy Advisors, INTL FCStone, World Fuel Services, Onyx Capital Advisory, Global Risk Management :Oil companies – Total S.A., Royal Dut ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
