THE RISK MANAGEMENT PROCESS Risk Management-What Does It Mean?

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!"# o$ $i%ms in inte%nationa& 'omme%'e ha(e &ess than )** em+&o,ees -

., /**)0k a(e%age mi1-si2e 'om+an, 3i&& gene%ate 456 to 45/ o$ it %e(en7e $%om o7tsi1e -8S8 Management P%o'ess o$ P&anning0 O%gani2ing0 9ea1ing0 an1 Cont%o&&ing an o%gani2ation:s o% othe% entit,:s %eso7%'es to $7&$i&& its o;<e'ti(es 'ost-e$$e'ti(e&,8 ) Ste+ Se=7en'e in RM P%o'ess I1enti$, > ana&,2ing e?+os7%es to a''i1enta& an1 ;7siness &osses that might inte%$e%e 3ith o%gani2ation:s ;asi' o;<e'ti(es8 E?amine $easi;&e a&te%nati(e %isk management te'hni=7es to 1ea& 3ith e?+os7%es8 Se&e'ting the a++a%ent&, ;est %isk management te'hni=7es8

Im+&ement the 'hosen %isk management te'hni=7es8

Monito% %es7&ts o$ 'hosen te'hni=7es to ens7%e the %isk management +%og%am %emains e$$e'ti(e8 Risk Management P%o'ess o$ making > im+&ementing 1e'isions that 3i&& minimi2e a1(e%se e$$e'ts o$ a''i1enta& > ;7siness &osses8 .%oa1 @ie3 o$ Risk Management Cas7a&t, Risks - ha2a%1 %isks o% a''i1ents

9i=7i1it, Risks - Ins7$$i'ient 'ash o% othe% &i=7i1 assets

Ma%ket Risks - not ;eing a;&e to ;7, o% se&& goo1s o% se%(i'es the o%gani2ation nee1s o% +%o(i1es in no%ma& ma%kets an1 7s7a& te%ms an1 +%i'es8 Po&iti'a& Risks - A1(e%se a'tions o$ go(e%nments that might e?+%o+%iate o% e?'essi(e&, %est%i't o% ta? an o%gani2ation:s assets an1 a'ti(ities8 Te'hno&ogi'a& Risks - Fai&7%e to kee+ +a'e 3ith 'hanges in +%o17'tion o% in o+e%ating te'hni=7es8 Risk Manage%:s F7n1amenta& Con'e%n Asa, someB Is the o%gani2ation:s o(e%a&& 'a+a'it, to 'o+e 3ith &osses0 %ega%1&ess o$ 3hethe% those &osses stem $%om $i%es0 &a3s7its0 o% +oo% ;7siness 1e'isions in managing s+e'7&ati(e %isks8 Com+%ehensi(e %isk management sho7&1 manage ;oth t,+es o$ &oss e?+os7%es8

P%e-9oss O;<e'ti(es E'onom, Re17'tion in An?iet, Meeting Inte%na& O;&igations Meeting E?te%na& O;&igations So'ia& Res+onsi;i&it, Post-9oss Cont%o& O;<e'ti(es S7%(i(a& Contin7it, o$ O+e%ations Sta;&e Ea%nings Contin7e1 G%o3th So'ia& Res+onsi;i&it, RISK The th%eat an e(ent o% a'tion 3i&& a1(e%se&, a$$e't an o%gani2ation:s a;i&it, to a'hie(e its ;7siness o;<e'ti(es8 Catego%ies o$ Risk Te'hno&og, O+e%ationa& Finan'ia& Po&iti'a& 9ega& H7man Ca+ita& Nat7%a& The Risk Management P%o'ess 48 I1enti$, 9oss E?+os7%es a8 Tangi;&es ;8 Intangi;&es /8 Ana&,2e the E?+os7%es a8 P%io%iti2e ;8 Che'k&ists C8 Se&e't the O+tima& Te'hni=7e0 o% a Com;ination a8 A(oi1an'e ;8 Cont%o& i8 9oss Cont%o& ii8 Se+a%ation iii8 Com;ination '8 Non-Ins7%an'e T%ans$e% i8 Ce%ti$i'ate o$ Ins7%an'e ii8 In1emni$i'ation

68 Im+&ement the Te'hni=7e )8 Monito% the Te'hni=7e0 Make Changes When A++%o+%iate Risk P%o$i&ing The ;7siness im+a't that a s+e'i$i' e(ent 3o7&1 ha(e on the 'om+an, an1 a 1es'%i+tion o$ its im+&i'ations8 P%esent a'ti(ities that a%e 1esigne1 to assist in the mitigation o% management o$ the e(ent o% 'onse=7en'es8 Possi;&e t%ans$e% o$ a&& o% +a%tia& &ia;i&it, to a thi%1 +a%t,0 o% the ass7m+tion o$ %isk ;, a 'ont%a't7a& ag%eement8 Risk P%o$i&ing The +%ima%, me'hanism to $inan'e the im+a't o$ the e(ent8 P7%'hase o$ ins7%an'e o% 1e(e&o+ment o$ 'a+ita& ma%ket so&7tions to t%ans$e% some o$ the 'onse=7en'es o$ the o''7%%en'e8 Remaining %isks that ha(e not ;een $7&&, 'ont%o&&e10 $inan'e10 o% t%ans$e%%e18 Ongoing %e(ie3 o$ the 1e(e&o+ment +%og%am 3ith em+hasis on im+%o(ing the %isk mgmt8 s,stem8 The Risk Management P%o'ess Risk Assessment Risk Control Administration

Risk Financing 48 RISK ASSESSMENT E(a&7ate o%gani2ationDs assets > %eso7%'es I1enti$, ma<o% &oss e?+os7%es Meas7%e '7%%ent %isk P%o<e't $7t7%e &osses an1 %isks /8 RISK CONTRO9 De(e&o+ +%oa'ti(e +%og%ams $o% &oss +%e(ention > %e17'tion in ke, a%easE o Em+&o,ee Sa$et, > Hea&th o En(i%onmenta& Sa$et, o P%o+e%t, > Data P%ote'tion o Se'7%it, o @ehi'&e F&eet Sa$et,

 P%o(i1e in'enti(es $o% %isk 'ont%o& at a&& &e(e&s o$ the o%gani2ation C8 RISK FINANCING T%ans$e% > %etain a++%o+%iate &e(e&s o$ %isk Maintain 'atast%o+hi' +%ote'tion A&&o'ate a&& %isk 'osts to 7nits on an e=7ita;&e ;asis 68 ADMINISTRATION De(e&o+ '&ea% %isk management st%7't7%e an1 goa&s Contin7a&&, monito% +%og%ess to3a%1 goa&s Maintain so7n1 'omm7ni'ations 3ith a&& stakeho&1e%s AREAS o$ CONCERN Ph,si'a& Damage C%ime .7siness Inte%%7+tion Po&iti'a& Risk P%o17't 9ia;i&it, Gene%a& > A7to 9ia;i&it, Stat7to%, 9ia;i&it, P%o$essiona& 9ia;i&it, En(i%onmenta& Cont%a't7a& 9ia;i&it, Risk Cont%o& P%og%ams T%aining Sta$$ing Mgmt8 St%7't7%e CEO 9ia;i&it, Risk Assessment Mat%i? E?+os7%e Des'%i+tion Assessment C7%%ent Risk 'ont%o& Res+onsi;i&it, Risk T%ans$e% Exposure Description Risk Assessment Matrix Assessment Current Responsibility Risk Control Risk Transfer .en'hma%king C&aim Management In$o%mation S,stems Se&$-Ins7%an'e Ins7%an'e Cont%a't7a& T%ans$e% Reins7%an'e Se%(i'e P%o(i1e%s Ret%os E?'ess 9imits Cost A&&o'ations Finan'ia& Ins7%an'e Co(e%age Te%ms > Con1itions Ca%%ie% So&(en',

Technique

Exposure Avoidance %ever o&n or lease this lot *ake at airport

Applying Risk Finance Techniques Loss Loss egregation Prevention Reduction !y eparation Control ources' (solate Flamma!les' Extinguish "rive a#e' election' Training' a#e Route Reduce' eparate )perate more' smaller lots

egregation !y "uplication Emergency use o# others property

Trans#er Risk Control Lease lot another

$heeler

Aunt *elinda+s Truck

"rive lo& ,less damage-' Less expensive vehicle

plit delivery &ith other trucks

Contract #or other trucks in an emergency

u!contract delivery' Rent Trucks' "estiny' Pickups

A&te%nati(e Risk Management Te'hni=7es P7%'hasing a ne3 (ehi'&e? . A++&, Si? Risk Cont%o& Te'hni=7es-making &osses &ess $%e=7ent0 &ess se(e%e0 o% mo%e +%e1i'ta;&e - The $o&&o3ingE Gene%a& Te'hni=7es A'tions E?+os7%e A(oi1an'e Amake Do not ;7, o% &ease &oss im+ossi;&eB 9oss P%e(ention A%e17'e D%i(e Ca%e$7&&,0 Se&e't $%e=7en',B 1%i(e%s 'a7tio7s&,0 Do Maintenan'e 9oss Re17'tion Amakes &oss D%i(e s&o30 'hea+e% sma&&e% sma&&e%B (ehi'&e Seg%egation ;, Se+a%ation O3n an1 o+e%ate t3o A7se se(e%a& 7nits %eg7&a%&,B (ehi'&es %o7tine&, Seg%egate ;, Se+a%ation -se a s+a%e0 tem+o%a%,0 A7se se(e%a& %eg7&a%&,B s7;stit7te Cont%a't7a& t%ans$e% o$ %isk -se a &ease1 (ehi'&e 'ont%o& AShi$t e?+os7%e ;, 'ont%a'tB A++&, F Risk Finan'ing Te'hni=7es Make +a,ment to $inan'e %e'o(e%, $%om &osses that o''7% 1es+ite %isk 'ont%o& e$$o%ts Gene%a& Te'hni=7e S+e'i$i' A'tion Retention Th%o7gh C7%%ent Pa, 1i%e't&, $%om '7%%ent

E?+ensing Retention Th%o7gh -n$7n1e1 Rese%(ing Pa, Th%o7gh F7n1e1 Rese%(ing Retention Th%o7gh .o%%o3ing Retention- A$$i&iate1 ACa+ti(eB Ins7%e% Cont%a't7a& T%ans$e% $o% Risk Finan'ing Comme%'ia& Ins7%an'e He1ging-take o$$setting ma%ket +ositions to ne7t%a&i2e ;7siness %isks

in'ome Re'ogni2e the nee1 to ;e %ea1, to +a, $o% 1amage Set asi1e mone, to ;e %ea1, to +a, -se a 9oan o% C%e1it Ca%1 Fo%m to <oin a GCa+ti(eH $o% (ehi'&e 1amage 9o'ate nonins7%an'e in1emnito% to +a, 1amage .7, 1amage ins7%an'e No a++&i'ation to e?+os7%e to a''i15&oss

The Fi%e at Whee&e%:s Ti%e Dis+osa&0 In'8 What ha++ene1?

Who is a$$e'te1? Fa&& o7t? Fig7%e o7t the e?+os7%e5&oss t%ai&I