The document discusses the risk management process and administration. It begins by explaining the importance of understanding an organization's goals and the different types of risks it may face, such as property, liability, and human resources risks. It then defines three levels of risk impact - critical, important, and unimportant - based on the potential financial impact. The document also discusses measuring risk severity and frequency. It notes that risk management involves implementing programs to address identified risks using various techniques. Finally, it discusses how risk management allows reviewing decisions to discover mistakes and correct misconceptions that it only applies to large organizations or minimizes the role of insurance.

1. Risk Management Process
and Administration
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2. 2

3. 3

4.  Thoroughly understand the goals and
functions of the organization.
 Different organizations faced different types of
risks.
 Example (types of exposures);
 Property risks – buildings, machinery, office
equipment, etc.
 Liability risks – public, product, employer.
 Human resource or personal risks – death, injuries,
retirement, sickness.
Hazila Ismail, INS 657, Chapter 3 4

5. 5

6. Critical Severe financial impact that could
result in bankruptcy (eg; food
contamination).
Important Moderate financial impact that will
not result in bankruptcy but require
resort to credit.
Unimportant Modest financial impact that could be
met from existing assets or cash flow
without imposing undue financial
strain.
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Measuring the potential size of the loss and the
probability that the loss is likely to occur

7. 7

8. Severity  maximum
probable loss
Frequency  likelihood of
occurrence
Hazila Ismail, INS 657, Chapter 3 8

9. The implementation of risk management
program by applying the identified
techniques .
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10. 10
Permits the risk manager to review
decisions and discover mistakes before
it become costly

11. Two misconceptions have developed concerning
risk management.
 The first is that the risk management concept is
applicable principally to large organizations.
 The second is that the risk management approach
seeks to minimize the role of insurance.
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