Corporate Risk Management

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Introduction…………………………………………………………….3

Corporate Risk Management Framework……………………………...4

Corporate Risk Management Processes………………………………..8

Conclusion………………………………………………………….....13

Bibliography…………………………………………………………..14

Risk refers to the uncertainty that surrounds future events and outcomes. It is the expression of the likelihood and impact of an event with the potential to influence the achievement of an organization’s objectives. Risk management is a systematic approach to setting the best course of action under uncertainty by identifying, assessing, understanding, acting on and communicating risk issues. The Corporate Risk Management framework is a systematic, integrated approach with a focus on managing financial risks to enhance shareholder value. The Corporate Risk Management processes are indentification of the risk, measurement , policy, process and execution. Those processes are utilised by corporate enterprises to manage the risk of fortuitous loss. Once corporate risks have been identified and their impact on the firm measured, risk management attempts to control the size and frequency of loss, and to finance those fortuitous losses which do occur. Those are the main definition about the subject, which are to be discussed in this document.

Risk Management is an ongoing activity and should be carried out as a part of day-to-day business. The management of risk can only take place within an organisational framework that is inclusive of all parts of the corporate infrastructure. Without this framework, risks cannot be efectivelly discussed, communicated, compared and managed in a coherent way across the whole organisation. Risk should be a feature of any management discussion of any uncertain circumstances including new initiatives of any kind and the implementation of significant projects

Risk management deals with insurable and with uninsurable risks and is an approach which involves a formal orderly process for systematically identyfying, analysing and responding to risk events throughout the life of a project to obtain the optimum or acceptable degree of risk elimination or control. Risk management is an essential part of the project and business planning cycle which requires acceptance that uncertainty exists, generates a structured response to risk in terms of alternative plans, solutions and contingencies ,is a thinking process requiring imagination and ingenuity and generates a realistic attitude in an investment for staff by preparing them for risk events rather than being taken by surprise when they arrive.

Risk management involves identifying risks, predicting how probable they are and how serious they might become, deciding what to do about them and implementing these decisions.
Corporates finance is the specific area dealing the financial decisions corporations make and the tools and techniques used to make the decisions. Categories of corporate financial decision making are : objectives of investment decision, financial decision and financial techniques. Corporates need a more advanced risk management approach in order to benefit from a competitive advantage from strategic risk management. They should manage risks proactively via an integrated approach with a focus on measurable financial risks. Quantitative techniques, such as cash flow-at-risk and earnings-at-risk, are necessary to look at the combined effect of risks on the formulated business objectives. Identification of risks, analysis of implications, response to minimise the risk and allocation of the contigencies are part of the process of managing the corporate risk. The objective to managing the corporate risk is to understand the risk that is known to be associated with the corporate strategy plan. This corporate risk management plan will enable the communication of the risks and risk treatments to be passed down to the strategic business units that may be...
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