Risk is the potential for undesirable outcomes from actions or activities. While safe harbors avoid risk, that is not what ships are designed for. There are many types of risks organizations face, including business, capital, credit, market, liquidity, environmental, operational, control, management, compliance, and organizational risks. Risk management involves identifying risks, assessing their probability and potential impact, establishing risk tolerances, and implementing controls and governance. Key principles of risk management include top management involvement, tailored approaches based on organizational nature, documented risk analysis, segregation of duties, accountability, internal auditing, integration across the organization, and established risk tolerance limits. Effective risk management requires clear roles, interdepartmental relationships, flexibility, and control

1. INTRODUCTION

2. Risk is the potential that a chosen
action or activity will lead to an
undesirable outcome.

3. SO SHOULD WE TAKE A RISK???
A Ship is Safe in harbor, however that is not
what ship are for

4. Types of Risks for an organization
Business Risks
Capital Risks
Credit Risks
Market Risks
Liquidity Risk
Environmental Risks
Operational risks
Control Risks
Internal Control Risks
Management Risks (Corporate Governance)
Compliance Risks
Organizational Risks

5. RISKS & TIME LINE

6. RISK MATRIX

7. Basic steps of risk management

8. Principles in risk management
Close involvement of top management
Risks varies depending upon the nature of
organization
Probability and Magnitude of identified risks need to
be documented
Proper segregation of duties
Accountability
Internal risk audit
Integration
Risk Tolerance limits

9. In risk management, the organizational setup must
have following elements;
Clarity in the job roles
Inter departmental relationship
Flexibility in terms of inter-connectivity
Control linkages and control rationale

10. Organizational setup of Risk Management
 Board of directors
 Risk Management Committee
 Sub committees
- Credit risk management committee (CRMC)
- Market risk management Committee (MRMC)
- Operational risk management Committee (ORMC)
 Each Committee has following cell
- Identification cell
- Measurement Cell
- Monitoring Cell
- Control Cell

11. WHAT IS CREDIT
Credit is the trust which allows one party to
provide resources to another party where that
second party does not reimburse the first
party immediately, but instead arrange either
to repay or return those resources at a later
date

12. What is Credit Risk
The potential that a borrower or counterparty
will fail to meet its obligations in accordance
with agreed term

13. Difference between Credit
Management and Credit risk
Management
 Focus (3 Ps in CM and Risks philosophy in CRM)
 Approach (Backward in CM and Forward in CRM)
 Concern (Repayment in CM and Default in CRM)
 Exit Feature (CM does not have Exit plan and CRM
always have Exit plan)
 Tools (FS, ratios etc in CM and CVaR, Simulation etc
in CRM)