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Copyright © Texas Education Agency, 2012. All rights reserved.
Risk Management Fundamentals
Statistics & Risk Management
1
Copyright © Texas Education Agency, 2012. All rights reserved. 3
Financial Risk ManagementThe practice of creating economic value in
a firm by using financial instruments to manage exposure to:• Credit Risk •Market Risk
Copyright © Texas Education Agency, 2012. All rights reserved. 4
Organizational Context
What is the Organization's Mission?–Must address the problem of protecting
itself against changes that can place the pursuit of this fundamental objective “at risk”.
Copyright © Texas Education Agency, 2012. All rights reserved. 5
Identify Weaknesses
Do you have Specific Weaknesses?–Weak Management team–Cash Flow Issues–Over Budgeted Expenses–Work Force Shortages– Intense Competition
Copyright © Texas Education Agency, 2012. All rights reserved. 6
Risks Inherent To:External Context– Laws and regulations– Markets and
competitionOperative Management– Contract compliance– Market share– Labor, skills, and
personnel losses
– Environmental factorsFinancial Management– Account collections– Exchange Rates– Liquidity http://www.ewf.be/media/documentosDocs/doc_16_ewf-644-08-fundamentals-of-risk-management.pdf
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Identify Change
What is driving the change?–Opportunity–Government– Economy–Marketing– Financing
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Risks ConsequencesWhy Money Loss?
Revenue Falls ShortEscalating ExpensesJudgments, Fines, and PenaltiesSecurity Breaches
Why Time Loss?Limited Human ResourcesLimited Expertise
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Calculate Probabilities
Comparison within OrganizationComparison within Industry
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Calculate Risk
Seriousness of Consequences
Lik
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