What is Risk Management
Risk is the effect of uncertainty on objectives risk management is one of the key components of an organization’s overall governance framework managing risk assists organizations in setting strategy achieving objectives and making informed decisions taking risks.
Risk Management Fundamentals
Is fundamental to an organization making profits and anon-for-profit delivering on its strategy innovation is risk growth is a risk at avoidance of risk poses a threat to the future of the organization so doing nothing is probably the greatest risk in dynamic external environment management needs to consider the risk of not taking a risk or not making a decision recognizing and managing risk is a crucial part of the role of the board and management oversight of risk management is the responsibility of the board they should review and approve.
The risk management policies and framework on a regular basis in this way the board decides on the nature and extent of the risks it is prepared to take in order to meet.
Its objectives management is responsible for developing and implementing the risk management framework and its internal controls the approach to risk will vary across organizations but a risk management framework should document risk tolerance the levels of risk-taking that are acceptable in order to achieve a specific objective will manage a category of risk appetite the level of risk the organization is willing to assume ensuring that the board management and staff all understand.
Making Decisions & Type of Risk
The scope for risk when making decisions and the type of risks that the organization is attempting to avoid mitigate transferor accept there are different types of risk strategic
Compliance risk common tools used in the identification and management of risks include the risk management process risk management policies and procedures risk and control self-assessment risk matrix scenario planning and loss event database the risk management process is iterative.
Which means that it is a process of monitoring reviewing and focusing on continuous improvement developing a risk culture means creating a workplace where the staff has the confidence to ask questions and to challenge assumptions about the way that business is can that our vision is to the champion whole of organization governance and risk management through education advocacy and engagement with members and their broader community contact us to find out more about governance Institute and the benefits of membership governance Institute strengthening society through governance excellence.
Principal Of Risk Management
Risk management helps us make decisions that shape the future of the organization there is an opera or a decision what approach to risk should we take how do we choose from among the varied.
Risk management frameworks there are a number of approaches to risk management for this training we will clearly focus on ISO 31000 depending on your industry in the jurisdiction or organizational needs another framework such as the COSO framework might be more appropriate still, it is important to elucidate the principles behind the risk management framework this course, in particular, takes a pragmatic approach to legal risk founded on a few principles the section of principles will identify.
Benefits of Risk Management
The benefits of risk-management in general and legal risk-management, in particular, these principles can help you justify the adoption of the risk management framework there are eight principles that animate the approach to legal risk management.
Principles of Risk Management
Create and protect value this is a tremendous challenge for legal professionals they are often viewed simply as cost centers they are also not trained to justify their work in terms of revenue and expenses one of the benefits of legal risk management is the ability to demonstrate the value of the legal profession to
integrate with the organization the practical corollary to the seemingly abstract idea of demonstrating value is the isolation of legal professionals from the rest of the organization or clients legal risk management provides an opportunity to integrate with a variety of parts of your organization rather than just waiting for problems to land on your desk 3 make
better decisions legal risk-management requires that legal professionals and doIntemain experts throughout the client or organization collaborate in a specific way for particular purposes this framework means that both sides have access to information otherwise unavailable legal risk management improves decision making for
Adapt to company strategy and culture the framework for legal risk discussed in this course can be adapted to a wide variety of business strategies and cultures it is flexible enough for large and small aggressive and conservative local and global organizations legal risk-management allows legal professionals to adapt to company strategy and culture five
Address uncertainty uncertainty is a given especially on legal matters we don’t know whether a thing will happen or how bad it will be the approach to legal risk in this training measures that uncertainty so that management can make better decisions in the face of the uncertainty six
Build repeatable processes legal risks historically boils down to case management a contract needs drafting lawsuits are filed in court there is a proposed rule change affecting our client we manage that matter to protect the legal rights of our client but the research analysis conclusions and communication about the matter differs depending on the professional tasks with the work and the nature of the issue legal risk management gives the organization are pea table and reliable process to identify analyze and manage risks 7
Clarify reasoning legal opinions speaking informally are often opaque to business colleagues if for no other reason than the clients lack legal education to assess the opinion the legal risk framework we developed provides a mechanism for the legal professional to translate their expertise into terms that are more accessible to senior management 8
Improve continuously risk management is not a set it and forget it exercise, the framework explicitly provides for absorbing information about its own effectiveness, Review of the results and adaptation based on its shortcomings
Our initial approach will likely fall short of its potential we will continuously optimize each part of the framework so that it grows with the organization
These principles are well and good ISO 31000can adapt to a variety of situations and organizations which means that there is no excuse to manage legal risk in your organization, simply do what you can with, what you’ve got, where you are some risk management is better than no risk-management, use the techniques that are helpful and your context should control how much risk management you take on.
In this section, we discussed the eight principles behind risk-management and how they apply to legal risk we also understand that risk management is a practical exercise and not just an academic inquiry in addition to the eight principles of risk management we learned how to use those principles to justify the adoption of a risk-management framework
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