Your SlideShare is downloading. ×
Risk Management A Balancing Act
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Risk Management A Balancing Act

692
views

Published on

Published in: Business, Technology

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
692
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
79
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. RISK MANAGEMENT - A BALANCING ACT Pillai Sreejith
  • 2. Risk (Science) & Management (Art)
    • Investigation & understanding the broad range of risks in relation to the organization's objective
    • Development of the ability to communicate, articulate and manage the identified risks
    “ Today’s total Risk Manager is the person who can combine art with science to master the challenges & opportunities of a fast-changing world”
  • 3. RISKS- A Fact File
    • The word, Risk has been derived from the Latin word, ‘Risicare’, which means ‘ dare ’
    • The lexicon defines Risk as threat or vulnerability
    • Risk Management (RM) emerged basically as a financial discipline
    • RM is popular analytical method for optimizing insurance coverage
    • RM is globally 50 years old
  • 4. RISK is a difficult concept to define!!!! And interestingly, (Risk is generally perceived with negative effects but it also signifies opportunity & growth )
  • 5. Types of Risks
    • Financial Risks
    • Operational Risks
    • Physical Risks
    • Strategic Risks
    • Reputation Risks
    • Business Risks
  • 6. RM Scenario in India
    • Still in its infancy
    • Mostly practiced in the Financial & Insurance sectors
    • BCP ( Business Continuity Planning ) is gaining importance
  • 7. CASE STUDY “ The Interdependence Between Insurance & Loss Prevention ”
  • 8. The Investment Project
    • A company invested 300,000 Pounds in setting up a manufacturing plant
    • The management estimated net cash flow of 90,000 Pounds & 12% net return per annum
    • To compensate for the dynamic business risks associated with the project, the company decided that it must earn at least 12% net on the capital invested
  • 9. Case Study Approach
    • An overly simplistic approach adopted
    • Objective of this case study
    • “How Investment Decisions can be affected by Risk Management considerations”
    • Factors not considered
      • Risk Transfer Methods
      • Deductibles
      • Premium Discounts
      • Business Interruption Losses (LOP)
      • Liabilities
  • 10. Appraisal of Project- Risk Management Considerations
  • 11. Conclusion
      • In evaluating investment projects, companies mostly omit risk management considerations
      • If the company is ‘risk averse’ , it would probably would not be prepared to accept the degree of variability in its annual results as shown in case 1
  • 12. Insurance & Risk Management
    • Insurance could be part of a comprehensive RM ( Risk Financing) plan
    • A good risk means a healthy bottomline to both the insured and the insurer
    • It is logical that the insurer promote loss control programme for insured as part of their BCP (Business Continuity Plan)
    “ For every 1 rupee insurance, there is 8 rupee non-insured losses”
  • 13. RISK MANAGEMENT is not GAMBLING !!! Making Risk Management Decisions Without Reasonable or Prudent Assessment could lead to business failure!!
  • 14. “ Retention of Risk is Business” RISK RETENTION/ TRASFER IS FINALLY A TOP MANAGEMENT JUDGEMENT
  • 15. CONVERTING THREAT INTO OPPORTUNITY !! “ Consider identified risks as opportunities to improve & not as threats”
  • 16. Aftermath of a ‘Bush Fire’ in California “ Managing Risks Better Than their Neighbors” Ice Plants
  • 17. Ideal Risk Management
    • Holistic
    • Dynamic (Pro-Active)
    • Balanced Cost & Benefit
  • 18. More on Risks…….
    • “Risks reduce the value of a firm to its shareholders. Whether a firm bears a risk or transfers it, risk has a cost, and a firm’s risk management effort is being judged by its ability to manage capital efficiently”
  • 19. Courtesy: The pictures used in the presentation are from various web sites.
    • LOSS PREVENTION
    • COST
    • INSURANCE
    • BENEFIT

×